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July 29, 2009 at 08:00 PM
Barry Diller, chairman and CEO of IAC/InterActiveCorp, created a stir last Friday when he said Web users will have to pay for what they watch and use. Diller, whose company runs the Ask.com search engine and Match.com dating service (he is also the chairman of Expedia Inc. and Ticketmaster Entertainment Inc.), is the latest media mogul to predict the era of free Internet content is ending.
According to published reports, Diller said, it’s “mythology” to view the Internet as a system of free communication while speaking at the Fortune Brainstorm forum. “It is not free and it is not going to be.”
It’s no secret that media companies are working tirelessly to develop effective ways to get consumers to pay for content they access online – there just haven’t been many successful models to follow, and it’s hard to be the first in a market to attempt to charge for content – do that and users will flock to free competitors.
Media companies like Disney see an online future with three revenue streams: Advertising, subscriptions and transactions. Only the first is currently producing at a rate that matters, but a great deal of effort is being expended to change that. The New York Times is reportedly considering charging consumers $5 per month for access to its Web site (or $2.50 for newspaper subscribers). That’s really very reasonable, but still a tough sell when consumers expect free access. When the Rocky Mountain News closed earlier this year in Denver, a group of laid-off journalists completely overestimated how many former Rocky readers would pay for a subscription to a new online newspaper – they received only a fraction of the commitments needed to make it anywhere near sustainable.
