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The End of the Free-Lunch Era?

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The Golden Age of the Web is over. Or is it?

The ongoing tumble in the value of technology stocks and the subsequent drying up of venture capital for dot-coms have had dramatic repercussions for Web-empowered consumers and businesses. Many Web services that were once free now cost.


For instance, the formerly free Britannica.com just began charging individual users subscription rates of $5 per month or $50 per year for full access.


Britannica.com, the online version of Encyclopædia Britannica and other reference materials now available at http://www.britannica.com, understands the Web mindset, which holds to the adage, “Information wants to be free.” The service still provides some free information, though there are caveats.


Without subscribing, you can still access all of the articles in the encyclopedia, though you can read only the first two paragraphs. Plus you can still access all of the pictures, though you can see only thumbnail versions.


In addition, when going the free route at this site, you can still read the full text of articles from popular magazines about the subject you’re searching for and the most recent 30 days of articles from the Reuters news service. But you’ll be bombarded with pop-up ads, whereas subscribing eliminates this distraction.


Britannica.com isn’t alone. The list of other one-time Web freebies whose backers now want you to open your wallet is long and includes top photo site Photop_don at http://www.photopoint.com, the excellent remote storage service Xdrive at http://www.xdrive.com, the versatile voice-mail service eVoice at http://www.evoice.com, the popular online payment service PayPal at http://www.paypal.com, and the well-regarded stock tracker Company Sleuth at http://www.companysleuth.com.

Why It May Pay to Pay

This sea change from free to pay wasn’t unexpected but can be painful nonetheless. Who likes forking over hard-earned dollars when you were previously subsidized by start-ups looking to build market share?


But without adequate revenue, many of these start-ups have gone away. It can be hugely expensive to run a Web-based service. Some photo Web sites, for instance, burn through $500,000 to $1 million a month to maintain their sites, costs that advertising alone can’t cover, according to market research firm, ARS.


The harsh reality is that if you’re using and benefiting from a service, and you want it to be around in the future, you’re better off paying for it than expecting a sustained free ride. When a service you or your business depends on goes under, you have to pay the occasionally large cost or undergo the occasionally large inconvenience of switching to another service.


Many people are, it turns out, willing to pay for information on the Web. A recent survey by the market research firm, Lyra Research, showed that 20 million people have already paid for Web content. According to the survey, 27% have paid for industry-specific business material, 18% for online database services, and 10% for premium music and news services. The most popular type of pay service is for adult material.


Some people argue that fee-based Web services will create a digital divide separating society into those who can afford information and those who cannot. But what will likely emerge in the online world are the same kinds of tiered services that exist in the offline world.


Offline, you can choose offerings ranging from pricey ad-free newsletters to free high-quality, controlled-circulation business publications. Or you can read newsstand and subscription newspapers and magazines for free at your local library, albeit less conveniently. Similarly, you can opt for free broadcast television, or you can pay for the extra channels of cable or satellite TV.


Likewise, a number of basic-level online services will undoubtedly remain free, with the only charge being greater inconvenience. You’ll have to put up with distracting Web ads, and you may be inundated with annoying e-mail promotions. Some high-quality services may remain free, as they still are today. But if you opt for a higher level of service, more and more, it will cost you.


The cost may be worth it. More so than in the past, on the Web today and particularly on the Web of the future, you’ll get what you pay for.


For businesses, it may be worth it to risk losing visitors by going from free to fee. Granted, it can be maddeningly difficult to persuade someone to pay for something they currently receive for free. But it’s better to find yourself less popular than out of cash and out of business.


On the other hand, more and more services have been going under or going pay. So, if you remain free, you’ll stand out more and just may attract enough visitors for the ad-only model to work.


Reid Goldsborough is a syndicated columnist and author of the book “Straight Talk About the Information Superhighway.” He can be reached at reidgold@netaxs.com or http://members.home.net/reidgold.

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