Why is it so difficult to get people to pay for Internet content

Asks marmalade

A. It is difficult to get the ordinary consumer to pay for information provided on the Internet because it is perceived by most of us as being free, so why pay for it - and sometimes if you have to pay for information on one site you can often get it for free on a competitive one, so we often just go elsewhere.

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Q. Why do we think Internet content should be free

A. When the Internet first started to get popular, back in 1994, content providers knew that they could never get anyone to pay to access their sites because the technology and the whole concept of the world wide web was so new that it was surrounded by a lot of scepticism - the thinking at the times was that people had to be lulled gently into finding out what the web had to offer and once they could not live without it they would start to pay for it.

Using the Internet has often been compared to taking a book out of a library - we see it as our right to access these books for free. But its not really free, it's a service that is paid for through local taxation so you don't really notice that you're paying for it - many Internet pundits believe that people will only pay for Internet content when it is (or becomes) part of a bigger service that they are paying for e.g. we accept that we have to pay for an Internet connection and telephone calls because we have always had to pay for it - so payment for content could be connected to this. But we are a long way away from this happening.

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Q. So how can people be made to pay for Internet content in the meantime

A. The demise of so may dot.com businesses demonstrates that the consumer cannot be made to pay for anything it doesn't want to - and once a free service becomes a paid service many customers are lost.

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The only way that people will pay for Internet content is if they really value what they are buying i.e. a known and respected brand e.g. the FT; personal financial information; stocks/shares and advice on how to make more money; etc are all areas where companies have created revenue streams through their online businesses. Also, unique sites that offer a service unobtainable elsewhere often find it easy to charge for their services e.g. high level business reports, with exclusive data more often than not sell well, and at very expensive rates.

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A report published by the consultancy Ovum in August 2001 entitled Wireless Internet Business Models: Global Perspective, Regional Focus states that the days of having free Internet content are numbered - however, people will pay for Internet content in the future if the content has a high perceived value. It classifies high-perceived value as content that has a high emotional (it uses horoscopes as an example) or psychological pull (it uses stock quotes as an example) or that which is needed urgently (e.g. news). Ovum believes that companies which offer a combination of free and premium paid-for services will be most likely to succeed.

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Q. Are there different ways of generating revenue through a website

A. Yes, some of the most popular include the following:

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Subscription fees: customers pay upfront for services or content which guarantees income. Customers usually sign a contract for one year's service, pay monthly (by direct debit) for it and often continue to pay thereafter, as it is difficult to break online contracts.

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Licence fees: usually gives you carte blanche to use and distribute any information from a site that you have paid an upfront licence for, often used by database companies or software houses.

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Per use fees: customers pay for what they view or download, usually financial information.

Invisible fees: this is an opt-in scheme where you pay a little bit of money e.g. 1p per page etc. usually via a special debit card, to access information on a site.

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Advertising: usually banner advertising, pop-up or flash ads - but these are being used less often now because they have been overused and people now find them very annoying so they have a negative effect on the customer, also you can install free software to stop pop-up ads etc. which has a negative effect on the advertiser. Banner advertising has been shown to work best for big multinational companies.

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Q. Are there any additional benefits to the customer if they have to pay for their Internet content

A. Besides the high quality content they'll be paying for there is a belief that once paid for content becomes the norm on the web websites and the services they provide will be better - sites will become faster (less design heavy and slow) and slicker (there will be no room for bloated and useless design) because they will have to be better than those of their competitors. So technically, your time spent on the web will be more fruitful.

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Q. You've sold me on the principal of why I may have to pay for web content in the future, but the actual act of paying via credit card for example is often lengthy, repetitive and insecure - is there any better way

A. Besides the fact that people simply do not like giving out their credit card details online, there has to be a better way of making online payments especially for low amounts. A comprehensive system of micropayments - on a separate debit card (either prepaid or on account) that is used for all online purchases, whereby you just type in your secure number and password and your address etc. is held on a central database, is not yet in place - and until this happens the concept of paying for Internet content on an everyday basis will not become a reality.

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Q. Can you give me an example of such a payment system

A. One example of such a system is known as Cartio, and it is currently on trial in the Netherlands. Once you have registered at the Cartio website you receive a card number and a password. You then download and install a small program to your computer, which takes care of your payments to content providers - and like a pay as you go phone card you have to deposit an amount of money onto your card before you can use it. Deposits onto your Cartio card can be made via credit card, debit card, or on receipt of a monthly invoice.

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When you visit a website accepting Cartio Micropayments, you simply pay for articles and items by clicking a pay-per-view link on the page marked with the Cartio logo. Once you have entered your card number and password you will automatically be told how much you have left in your account to spend online, and then you can go ahead and pay for your Internet content. The Cartio card and installation software is free of charge - more information is available from www.cartio.com.

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Another micropayment system is that offered by Qpass - it is a US-based company that is currently working with The LA Times and the Wall Street Journal - it is up and running and helping these two newspapers make money by selling news content.

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Q. Can you give any examples of online companies that are making money by charging for Internet content

A. Some companies making (or which have made) money from Internet content include The Wall Street Journal , The Times crosswords, Big Brother (SMS news from the TV programme while it was aired), and Loot's classified ads section.

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If you have any other Internet and Technology questions, please click here

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By Karen Anderson