Barry Diller And I Don't Agree About Charging For Online Content

Posted by: Jon Fine on June 10, 2009

A few hours ago I interviewed IAC Chairman-CEO Barry Diller onstage at the Advertising 2.0 conference, During said interview, he came out much more strongly in favor of paid content online than I’d ever heard him.

I’m nowhere near so sanguine as he is that getting people to pay online will be so doable. Not that the big newspaper and magazine and TV players won’t try; some of those houses are burning down so quickly that their occupants no longer have a choice. But there’s a very big difference between putting a tollbooth up and stopping motorists from flocking to the other free roads available to them.

I typically do a terrible job remembering and notating exactly what was said in such onstage situations. Luckily CNET’s Caroline McCarthy was all over today’s session. Read her full account, but some of her Diller quotes appear after the jump:

"I absolutely believe that the Internet is passing from its free phase into a paid system," he predicted (though, keep in mind, Diller did say he doesn't like to predict). "Inevitably, I promise you, it will be paid. Not every single thing, but everything of any value. Again, take commodity away from it."

(Tim Shey’s Twitter feed quotes Diller as saying Internet video “is going to get paid for” as well.)

"People were so frightened of not being dinosaurs, and [burying] their heads, and not having what happened to the music industry happen to them, they just slapped everything up on the Internet for free," he said. "That's an accidental historical moment that will absolutely be corrected."

"One of the greatest barriers to buying things is the steps that it takes, and we all know the difference when you go to Amazon and you just push your little thing and it's bought, paid for, delivered, billed, et cetera., instantly, and how much that has enabled or how much that has made the difference between just browsing and buying...that little thing, that in fact you scroll it, you do it, it comes, everything else is taken care of, is the answer to what's going to happen on the Internet when, in fact, we get the applicability of that broadly."

That last bit appears to endorse the work of Steve Brill’s upcoming Journalism Online launch, which promises to have a single payment system that will work across the paid-only areas of many different sites, and which will debut later this year.

As for me, I wish it were such a simple leap from iphone applications to paying for content online. It’s one thing to pay for a utility—like a souped-up GPS for iPhones that don’t come with it—and another thing entirely to pay for a short video or an article. Yes, people pay for songs and movies and TV show episodes on iTunes. But these are much more durable artifacts. You can consume them more than once--and in some cases, many more times than "more than once"--unlike the average gag video or newspaper article. Also, uhm: many iPhone apps are really cheap. I’m not sure a New York Times app for 99 cents is going to save the company.

The bias for free content online has little to do with there being no easy way to simplify a buying process. It has to do with people being unwilling to pay for most online content. I strongly suspect that we’re going to see much broader experimentation and implementation of ways to cadge fees from online users. I’m much less sure that it’s going to be easy to get those users to go along.

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Reader Comments

Don

June 10, 2009 10:28 PM

This is not 1997, it's 2009. There is an entire generation who never had any intention of subscribing to a newspaper, never subscribed to said newspaper, and Barry Diller believes that they will pay for online subscriptions. It's just a case of the cart before the horse- the business that needs profit trying to drive demand.

The reality is that there is hardly a single scenario of newsroom finances that I didn't overhear discussed by a DC friend's media maven father after the opening of the 1987 film Broadcast News. Nothing has changed except the speed of the withdrawal of money from the news economy.

Journalists covering journalists not making money is every bit as strange as that neighbor you know in real estate complaining that people aren't looking at their open houses as if the customer was the problem and not the fact that the banks aren't writing loans.

Barry Diller: As soon as people's companies went bankrupt and their houses were foreclosed they canceled their newspaper subscriptions. $0.99 NY Times apps will not get them their house back.

Alex Salkever

June 11, 2009 02:28 AM

I disagree with you here, Jon. I've been talking to a lot of friends about this. Their stance, generally, is "I'd be glad to pay for content if it were easy to do." I think you underestimate the value of a really good article -- it won't be 99 cents like on iTunes but it could well be 10 cents or more. This is more less validated already with the Kindle where people are paying, in many cases, 10 cents per article or more. Barry's right. Yes, content must be better. But's all about ease of use, not some rebellion against paying for content.

Anonymous

June 11, 2009 08:30 AM

Charging for all online content is like a library charging you to rent books. Information should be free, my friends.

Long live open source and the current state of the Internet.

AK

June 11, 2009 01:03 PM

@Anonymous,

I disagree. The only reason you don't see "library charging you to rent books", is because they charge you through your taxes, and they receive donations. At the end of the day, someone has to pay the bills, for the news, movies, music, etc. If nobody pays, then at some point, forget about online content.

Nothing comes free except death, and hopefully God's grace and eternal life.

Dave Bricker

June 11, 2009 04:39 PM

People will pay for things they value. If they can get it free at location X, they won't pay for it at location Y.

But what do people really value? Not products, companies or services. People value people. People value these other things only by extension - if the service is good, the people behind it must be good people. If the company calls to send a refund because the price dropped the day after my order, the people behind the company must be honest.

The noisy and crowded web-space has its share of poor buying experiences, but it has a surplus of meaningless and valueless experiences - white pixelscapes bespattered with factoids and images of the latest cheesecake divas. Pay for this stuff? I can't shut it off!

While the good news is that there's enough free data out there to keep profiteering to a minimum, there are ways to cultivate customer loyalty online that builds relationships that result in sales.

I encourage you to visit http://www.aSiteAboutSomething.com for independent novelist and songwriter Richard Geller. Geller understands that people will only buy books or music from an unknown artist if they have received some value first. The site contains 14 songs, a free E-Book and 200 pages of other writing to sample, but mostly, it encourages people to visit and enjoy a 3D world based on Geller's stories. A disproportionate number of visitors stays on the site for 45 minutes or more, and these are the people who ultimately become customers; people who have invested time in the site and who feel that Geller has invested in making that worthwhile.

In the old days, the rule was to put a starburst graphic on things that said, "BUY NOW!" Even if people really ever were stupid enough to respond to that message with an involuntary purchasing response, those days are over.

I do think people will pay for things on the web, but I wonder if the world of commerce is prepared to shift from the distribution model to the excellence model in order to make that happen.

BoSacks

June 11, 2009 07:26 PM

I am so sick of this discussion.

Start at the beginning please. The internet is not free. Depending upon your addiction, you pay a mighty hefty fee for entrance alone. I pay between all my devices at least $300.00 a month.
Probably more.

Where exactly do you define that as free?

Oh, you mean after I pay at the gate for entrance to the park, I have to buy tickets for each ride. Disney used to be that way they changed the policy a long time ago, and they ain’t going back.

If we are to make a fair profit it will be as a consortium deal just like cable TV. Do we pay micro-payments to all the shows we watch? Hell, no. We pay up front for anything we feel like watching at any given time. That is the simple answer.

So Jon, send this note to Barry and get it done already. The rest of the discussion is just ridiculous. If we don’t get it up front we aren’t going to get it at all.

BoSacks
www.bosacks.com
-30-

Don

June 11, 2009 09:18 PM

I wonder if the world of commerce is prepared to shift from the distribution model to the excellence model as well. Ask Barry Diller that one next time.

I don't believe he's even prepared for the awesomeness model or the magnificence model, let alone the excellence model.

The question I have for you, Jon, is whether or not your business is prepared to distribute content on the amazingness business model?

Michael

June 15, 2009 02:17 AM

Maybe we are all looking at the wrong platform and paid content will come from digital television before it hits the Internet. More eyeballs and better content.

Greg Patrick

June 22, 2009 11:05 AM

I don’t think it will happen. I don’t think Barry is being realistic.

I would not pay to extra

Use online banking from my bank
Pay bills online
Shopping (Amazon, Ebay, Paypal, Jcpenny, Haband etc)
Using message board
Using Email
Using Job Search site
Using Search Engines
Using Newsgroups
Use Yahoo Answer
Read and Do blogs
Twitter would fail.

Not everyone had a debit or a credit card. Plus I would be concern with the security of that information especially on some websites I have seen.

If it did happen.
Post office would see a increase in business if it did happen.

Libraries couldn’t offer free access to their patrons anymore.

Rob Anfinson

July 7, 2009 02:26 PM

I am a website consultant to community newspapers and have helped launch well over 300 sites. The big dailies are in a tough position, if they charge for national and int'l news the reader will just go to the news outlet that provides that for free. They have to become more local with their stories.
People are willing to pay for local news coverage, my customers who are doing this are succeeding with this model. The reader "gets" that their local paper is a business and if they want to read about the girls volleyball team going to state there is only one place to get that story and its being delivered by a qualified writer (unlike the inconsistency of "citizen journalism".)
People are OK with paying for content - it's happening now, nine of my last ten newspaper clients are charging for local news and sports, everything else is free on the site.

Eric Olander

July 10, 2009 06:35 PM

I come from the school of thought that believes the sooner Barry Diller and Rupert Murdoch start charging for news content with micro-payments, the faster their companies will disappear as their readers flee and we will all be able to focus on building the next generation of journalism rather than try to squeeze the old model into a new one that just does not fit.

Go Barry Go! Let's hurry up!

RoyalSunshine

July 11, 2009 06:18 PM

Many business minded people are not there to provide services but to make money first. These businesses usually don't last that long, and sooner or later, some kind of disaster happens. Business 101: owners of businesses should not be asking "how can I make money?" they should ask first "What do my customers want?"

These business men also lack understanding about computers, technology, and the history of internet. Since it's conception, internet is there to serve, to provide a free place to gather and share information. These people thinks they are so technology smart that they can reinvent the internet.

Anyone who knows a little more about internet and technology knows how to get free content legally in many ways.
There are many websites from other countries will provide the same free information. Unless they plan on controlling all the countries in the world, they cannot control the internet.

Another point is that internet users have short attention span. It's not a matter of wanting or not wanting to pay $1 for a content. It's the fact that the extra few seconds of "making the payment", pulling up a page of explaining all these stuff , will turn away many people's attention. Yes, I have encountered paid contents on Wall Street Journal that I am willing to pay for. But I don't have the time to reach into my wallet and get out a credit card, open an account, just to read this one article. In fact, I am so turned off by the warning page that I just close the page, and try to find the same information for free elsewhere. 100% of the time, I did find it.

Let them charge for their contents! We will just wait for major bloggers to pay for them and talk about them in their blogs! How are they going to prevent that? If it's important news, we will just wait for the TV or the old fashioned radio to talk about it. If they don't talk about it, it's probably not that important.

It's like saying, let's make a business to control everyone and see if the public would comply. Let's make a business to control information so that people cannot get it unless they pay for it. How selfish is that?? That's not only re-inventing the internet, it's also re-inventing the media in a backward destructive way.

I cannot believe they compare paid music with paid article. Paying for music is owning a piece of art. You get to replay it over and over again. So you don't feel like kicking yourself after the purchase. How many articles have you read that have made you feel like you want to re-read it over and over again? Yeah, people will pay for contents for the first couple times, but sooner or later, they will realize, they should have kicked themselves for being so stupid.

RoyalSunshine

July 11, 2009 06:22 PM

Many business minded people are not there to provide services but to make money first. These businesses usually don't last that long, and sooner or later, some kind of disaster happens. Business 101: owners of businesses should not be asking "how can I make money?" they should ask first "What do my customers want?" If you don't even know that, you shouldn't be in business.

These business men also lack understanding about computers, technology, and the history of internet. Since it's conception, internet is there to serve, to provide a free place to gather and share information. These people thinks they are so technology smart that they can reinvent the internet. That is the very core reason that made the internet so popular.

Anyone who knows a little more about internet and technology knows how to get free content legally in many ways.
There are many websites from other countries will provide the same free information. Unless they plan on controlling all the countries in the world, they cannot control the internet.

Another point is that internet users have short attention span. It's not a matter of wanting or not wanting to pay $1 for a content. It's the fact that the extra few seconds of "making the payment", pulling up a page of explaining all these stuff , will turn away many people's attention. Yes, I have encountered paid contents on Wall Street Journal that I am willing to pay for. But I don't have the time to reach into my wallet and get out a credit card, open an account, just to read this one article. In fact, I am so turned off by the warning page that I just close the page, and try to find the same information for free elsewhere. 100% of the time, I did find it.

Let them charge for their contents! We will just wait for major bloggers to pay for them and talk about them in their blogs! How are they going to prevent that? If it's important news, we will just wait for the TV or the old fashioned radio to talk about it. If they don't talk about it, it's probably not that important.

It's like saying, let's make a business to control everyone and see if the public would comply. Let's make a business to control information so that people cannot get it unless they pay for it. How selfish is that?? That's not only re-inventing the internet, it's also re-inventing the media in a backward and destructive way.

I cannot believe they compare paid music with paid article. Paying for music is owning a piece of art. You get to replay it over and over again. So you don't feel like kicking yourself after the purchase. How many articles have you read that have made you feel like you want to re-read it over and over again? Yeah, people will pay for contents for the first couple times, but sooner or later, they will realize, they should have kicked themselves in the head for being so stupid.

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The media, entertainment and marketing worlds continue to shapeshift on a near-daily basis, as new forms arise and old assumptions erode. Where is it all going? No one really knows. But on this blog BusinessWeek’s media writers Tom Lowry and Ron Grover promise to provide ample helpings of scoop, provocation, and sharp analysis as they track and annotate this constantly changing terrain.

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