Will Web Sites Remain Free?

For media companies, the early days of the Web resembled a land grab, as they fought for the online audience. But today, the people running major content sites are more like geologists hoping to strike oil in uncertain terrain.

Two years after the dot-com mania began to fade, Web executives are still trying to reconcile one of the medium's best-known dictums — that information wants to be free — with the fact that businesses exist to make money, and that to date, most Web sites have not.

So instead of geological survey maps, they're scrutinizing user registration lists and demographic studies, looking for clues that might indicate how they can open readers' wallets without scaring off their audiences.

As a result, the amount of online material available only through subscriptions or other fees is increasing, although the people running many prominent Web sites say they are not planning to charge for basic access to their sites.

"We're not doing that any time soon," vowed Washington Post Co. chairman and CEO Donald Graham, speaking a recent conference held by research firm Jupiter Media Metrix.

Even executives at The Wall Street Journal online, the best-known news site charging subscription fees for basic access to its offerings, think their own approach will remain something of an exception to the rule.

"There is always going to be free competition in news," says Neil Budde, publisher of the WSJ's online edition.

Go There Free, Then Pay the Fee

Such forecasts come with strings attached, however, since the broad pattern in the industry — apparent to frequent Web users, and reinforced by comments from an array of media executives — is clear enough. Many large sites hope to turn profits by offering a basic layer of free content, in order to draw a wide audience, while charging for additional content or services.

"Our basic hard news product needs to be free," says Larry Kramer, head of CBS' Marketwatch.com. But he quickly added: "We're going to test subscription products. Sites giving away things for free that don't attract revenue actually will go away."

For instance, the popular portal Yahoo!, which provides many Web users with their news, is charging for more and more of its services.

And among other sites following a two-tier model: CNN.com, which announced two weeks ago it would charge for all video clips on its site, and this Web site, ABCNEWS.com, which already charges for some video clips.

Both sites offer video via RealNetworks' RealOne SuperPass, which aggregates clips from several sources and costs $9.95 per month. RealNetworks shares the revenues with the companies providing the video clips.

"The trend is that companies want to have diversified revenue streams," says David Card, a senior analyst at Jupiter Media Metrix.

Ad Slump Prompts Sites to Package Content

This two-tiered model is shared by Web sites belonging to organizations that traditionally charge for subscriptions, like newspapers, as well as those previously in the habit of giving their audience news for free, like the television networks.

The Web site of The New York Times, for instance, offers its daily news for free, but charges for archive searches, packages of op-ed pieces, classified ads and a special crossword section. The Times' Web czar, Martin Nisenholtz, says those elements have helped the site turn an operating profit for two consecutive quarters.

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