may-2010

Cashing in
the clicks
The Internet has revolutionised business. So why do so
many fi rms struggle to make money from it?
ILLUSTRATIONS: RHONALD BLOMMESTIJN
The Internet has spoiled us.
From carefully crafted albums to
roughly shot footage of cats falling
over, whatever we fi nd online, we
expect to get for free. It is not a model
that business has adapted to well.
Jeff Zucker, the president and CEO
of US TV station NBC Universal,
famously summed up the concern of
companies about how to manage the
Internet by saying, “we’ve traded
analogue dollars for digital pennies”.
Traditional media organisations
like his have suffered more than most,
and Zucker recently updated his
Zeitgeist-capturing quote to say, “we’re
up to dimes”, but his worries will be
familiar to businesses everywhere. The
Internet allows fi rms to reach more
potential customers than ever before. It
just can’t make those customers spend.
Social media site Facebook is
valued in billions of dollars, but had
more than 300 million users and an
entry in the Oxford English Dictionary
before it turned a profi t. “There are a
lot of things for which consumers do
not expect to pay,” says Ken Homa, a
professor at Georgetown University in
Washington, DC. Most of those things
are online. The Internet has led many
of us to expect to get our TV, music,
news and networking for nothing. But
these sites are expensive to run, and
their owners are not charities.
“The idea that nobody will pay for
content online is nonsense,” says
Michael Nutley, editor-in-chief of New
Media Age. “But to persuade them to
pay, you have to offer something that
they can’t get anywhere else.”
Finding that something is the
tricky part. In 2009, Rupert Murdoch,
the founder of News Corp, the world’s
second-largest media organisation,
announced that he would begin
charging for online content. News
Corp had just reported a loss of $3.4
billion in the 12 months to June 2009.
Many felt it was a sudden reaction,
reasoning that if the News Corp
websites of The Times or The Sun
newspapers began charging, readers
would simply opt for one of the six
daily British national newspaper
TECH BUSINESS
websites that were free; something that
would be repeated for News Corp titles
from Pittsburgh to Papua New Guinea.
“This is a vexed issue for media
owners,” says Nutley. “It’s very diffi cult
to charge people when you’ve been
giving them something for free, so
fi rms are having to do more work
behind the ‘paywall’.” One area that is
having some success is very specialist
“Business has
traded analogue
dollars for digital
pennies”
sites that offer information which isn’t
available elsewhere. Nutley suggests the
UK’s Financial Times website as an
example of a subscription model that
appears to be working, and perhaps
information with a solid fi nancial value
will always sell.
FREE Holland Herald 43