Subscription services: A new wave

By Vishnu K. Mahmud

JAKARTA (JP): In the heyday of the Internet Revolution, Web portals and e-commerce sites all focused on grabbing market share. Forget revenue streams, profitability or even standard business practices, the main focal point of these new dotcoms was to get as many registered members and mind share to their Internet sites as possible.

Content was king for these companies. It was also the main factor in bringing the masses to their websites. Armed with their loyal membership lists, many dotcoms planned to launch e-shopping services and sell advertising as a form of revenue.

Fast-forward a few years. With the implosion of the Internet bubble, venture-capitalists and other investors became wary of sustaining money-draining Web enterprises.

The way to quick riches from an IPO (Initial Public Offering) in the stock market had evaporated. Internet advertising never took off as expected, as the audience was too wide, too vague and not easily targeted. There were plenty of websites that had millions of page views and hundreds of registered users, yet lacked even the most basic revenue streams.

With the market correction and the ensuing start-up bloodbath, the surviving dotcoms had to revamp their business plans and revenue models. One model that seems to have some promise is subscription services.

To date, there have only been a few success stories in the subscription model. Only those with compelling and exclusive content can charge the premium rates that their users would be willing to pay.

The Wall Street Journal and Playboy Online (along with other sites offering similar content) are excellent examples.

The Wall Street Journal online (www.wallstreetjournal.com) not only has news and features from the printed newspaper but also up-to-the-minute news items, research tools and portfolio tracking. These attributes are now available in other websites but they lack the clout of the Wall Street Journal brand.

The Journal has established itself as the de facto leader in its field: the aggregation of business information.

Many people scoff at this idea. Pay for something online that has always been at no cost? Information is supposed to be free! There must be other sources providing the same services, right?

Not anymore.

With the successful capitulation of Napster, the "notorious" music file sharing software, copyright holders of music, movies and other digital content are slowly establishing a beachhead for subscription services. Want to see a movie online? You can purchase it here! Want to read the latest news? Join our news subscription plan now! Because you will not be able to get it anywhere else at the same speed, quality and price. And if you can, we'll sue!

Perhaps this is one point of view that has yet to be accepted by a majority of users of the Internet. People who post news items, comics, music and film for our pleasure should be compensated.

These are the people who must fork out money to handle the operational costs, server fees and (most importantly) the bandwidth expenses. As their site becomes popular, more and more people will visit their website, which will lead to the raising of their bandwidth costs. Someone has to pay for that.

Copyright is also an issue. Many artists may have had their creation posted online for other users to download without proper recognition or compensation. Such piracy may be able to advertise the product to a wider audience, but it can also fall into the hands of profiteers who will sell those items without crediting the proper copyright holders.

As such, corporations and individuals are more likely to take legal action to ensure that their products are not illegally copied and sold. With such acts, content can be assured of safe distribution and credit. It would not be fair if one person paid for his online services while another freeloaded his way at the expense of everyone else.

Skeptics may suggest that subscription services alone may not be able to fully finance full-scale portal operations. That may be true. But most importantly, the idea must be accepted online as more and more services utilize the infrastructure of the Internet. Music, movies and news will soon evolve and be distributed on the world wide web.

If we keep on asserting that content must be free for the user, the Internet and its underlying communities and services will never be able to evolve. Some things are actually worth paying for.

The writer is an IT consultant based in Jakarta. Questions? Contact Vishnu at sundaypost@thejakartapost.com.