The early days of the Web were a bit like a Woodstock for propeller heads. There was the same euphoria and hallucinogenic optimism that we were on the threshold of a new world order. It didn't matter if Web sites worked, as long as they were "cool" or "killer."
"Information wants to be free" was a battle cry for those times. It gave us the idea that we could make money on the Web without actually having to sell anything, especially information. There were lots of ideas about how this would all come off. Hardly any of them worked the way the Net pioneers thought they would.
One of the great utopian ideas that came from the propeller head side of the world was "try it before you buy it" selling. It works this way.
You get something, like a software program or an article or some advice, for free. Then you decide what it was worth to you and pay up. Sounds great. Doesn't work real well.
Robert Woodhead, a first rate programmer and proprietor of selfpromotion.com, did a study of this a few years ago. He discovered that only about ten percent of the folks who get the software this way ever pay for it. Most of the ones that do pay just $10. At that rate you'd have to have almost everyone on the Web taking your product before you start to make big money.
That doesn't mean that selling information this way can't be profitable, though. Those figures are for the casual users who register on Robert's site. But his research also shows that the percentage of folks who pay after making active use of a site, 'is very high' and that allowing folks to decide what to pay typically doubles the total amount of revenue received. That makes 'tipping' an excellent way to sell software and information products that have little to no marginal cost."
Once business people started getting hold of the Web, they came up with the Great Portal concept. The Great Portal was supposed to be the one place just about everyone with a pulse would visit as a way to reach the rest of the web. Information was supposed to be the lure that got folks to visit the Great Portal.
Yahoo followed this plan. They succeeded about as well as anyone. But they didn't do well enough. Now they are going to offer you free services only if you allow them to bombard you with advertising in just about all of the available media. This includes digital media like e-mail and physical world media like direct mail and telemarketing. No doubt they will eventually expand to skywriting, tattoos, and stained-glass windows.
An advertising-based strategy was popular in the early days of the Web. Publishers with great content decided that their royal road to riches would use their content as the lure so they could make money on advertising. In the beginning this almost looked like it worked.
Consider Slate, the online magazine that was going to bring us astute political commentary and make a bundle in the process. It tried to make money from advertising alone, but that didn't work.
They've tried adding subscriptions to the mix. That hasn't worked either and Michael Kinsley, the commentator brought in with great fanfare to run Salon and make it a success, has slunk away to what he calls "other pursuits." Salon, so far, has tried two of the three ways you can make money from information on the net, but they haven't found a winning formula.
To make money from information on the Web you have to do one or all of the following. You can sell something on a piecemeal basis, one article, search or service at a time. You can sell access to information for a period of time. We call this a subscription. And you can sell advertising.
The sites that are making it are using a mix of these three ways. They don't rely on one way of making money. Instead they use two or three.
Look at the New York Times. They claim that you can subscribe for free, but that's not exactly true. You pay for your subscription, but you pay with information instead of money.
When you subscribe to the Times on the Web you must fill out a detailed questionnaire that tells the Times quite a bit about you. They use that information to target their advertising to folks who are likely to find it interesting. That helps the Times get advertising rates that are higher than average.
It doesn't stop there, either. While your subscription gives you the complete content of the printed version of the Times, and lots of extra material and alert services, it only gives you the last week of that content for free.
If you want an article that's more than a week old, it will cost you. You can search the Times extensive archives and get a list of articles that match your criteria. You'll also get the price you'll have to pay to see the full article.
So, what seems to be working? The sites that are making it today seem to have two things going for them. One is unique and valuable content. This is the product component.
On some sites a limited amount of the content is free. Visit Hoovers and you'll find lots of information, but not all the information you might want about a company or industry. To get all the information Hoovers has on file, you'll need to subscribe. Ancestry.com uses a similar system.
Unique and valuable content alone won't do the trick though. There can't be any free alternatives, either. That's what slammed Britannica in the early days of digitized encyclopedias.
There was Britannica with the most reputable content in English. That content was encased in sets of books that cost $1500. This was very profitable since content, printing and distribution only added up to about $400 tops. Even with a rich commission structure the sets were profitable.
Then, along came Encarta. It was an encyclopedia on disk, based on the old Funk and Wagnall's encyclopedia that we used to buy, a volume a week, down at the grocery store. It cost about $50.
True, the Encarta encyclopedia wasn't in the same league as Britannica. Comparing the two was like comparing fine dining with fast food burgers. But Encarta cost $1450 less unless you got it with your computer. Then it was free.
To make a go of selling information on the Web you have to have both unique and valuable content and a lack of free competition. The Times seems to be doing quite well at it. So are some other sites.
The Wall Street Journal has charged subscribers almost from the beginning. The rate is reasonable, and subscribers to both print and online pay less for online access. But the Journal is increasing its advertising and cross-links to other Dow Jones websites that require subscription.
Many sites are simply taking information or services that used to be free and putting them behind a wall with a toll booth. That's happened at sites like American Greetings, for example. Other sites are coming up with totally new information services that they can sell.
Major League Baseball (MLB) figured it couldn't make money from just scores and highlights. Lots of free competition already existed for that. So they came up with something new. It's called "Condensed Games."
Everyone who's ever watched a baseball game knows that the players aren't playing most of the time. What MLB is doing is taking out all the waiting and just giving you video of the plays. True, you'll miss a lot of scratching, glaring, spitting and waiting, but you'll get to watch all the plays in minimum time. All you have to do is go to the MLB website to subscribe.
I love Terry Gross's show "Fresh Air" on public radio. The problem is that it's not on at a time when it's convenient for me hear it. So I used to have to either distort my schedule or miss shows. Not any more.
Now I use a service called Audible.com. Audible lets me download every "Fresh Air" show as soon as it's available. I get the show in MP3 format on my computer. I can listen to it whenever I want and I don't miss a show. I'm willing to pay money for that. Audible also sells audio versions of books, magazines and newsletters in the same way.
What's this all mean to you? If you've got good information to sell, there probably is or will be a way to make money from it on the net. Keep your head up and keep looking. Opportunity is out there.
What if you're an information user? Well, then, my friend you're going to find more and more good and valuable information out there. But you'd better plan on plunking down money for what you want, because toll booths are going up all over the information superhighway.
This feature appeared on 6 May 2002
