Content providers must find a flexible method of charging for their
online services
With the collapse of revenues from Internet advertising, companies
now view charging for content as a serious business proposition.
They are looking for a flexible billing solution that offers a
choice of methods, which cater for both small and large amounts, to
pay for content.
Understandably customers are leading the drive for a variety of
payment mechanisms to choose from. These include straight-to-bill
(utilising telecoms provider or utility bills); pay-per-view; and
pre-pay. For adoption, and therefore success, the need for choice
remains crucial. The holy grail of online billing is to be able to
offer payment choice for customers and marketing opportunities for
providers.
Now that it is becoming evident that customers are willing to pay
for content, content providers need to look at how much they are to
charge visitors to view premium content. A happy medium needs to be
found which is acceptable to customers and providers alike. For the
latter, care must be taken, as the cost of taking payments could
massively reduce potential revenue streams or make them completely
uneconomic.
An efficient payment solution is essential to content billing
success. Also key is the creation of a pricing model enabling users
to access the service without being conscious of what they are
spending - as happens with standard voice calls.
Here are some of the payment options available:
- Up-front pricing and payment (for example, subscription) works
well for things like fan clubs, where customer loyalty is
established. However, many people are put off by the idea of
signing up for something over a period of time and this creates a
barrier to uptake
- Paying for content via credit cards can eat into margins,
particularly when handling micropayments. A recent move saw US
company PayPal, which allows businesses and individuals to send and
receive money online, announce that it would start to charge
customers for credit card transactions
- Pricing and billing per megabyte is another option, but the
drawback is that customers do not understand what they are getting
for their money - after all, how big is a typical e-mail? It is
difficult for customers to control their costs, leading to fear of
excessive bills
- Billing straight to a customer's mobile phone bill is the
latest payment option available. Analyst Forrester Research
predicts that this market will be worth £2.8bn by 2005. The charge
for digital content is placed on the consumer's mobile phone bill
or is deducted from a prepaid account.
Once the content provider has identified and selected the preferred
method for billing for content, it needs to set up and manage the
relationship with each payment provider. This can be time-consuming
if managed in-house. However, an outsourced billing solution is
available whereby the billing provider sets up and manages the
service and relationship, acting as a one-stop shop for content
providers. This allows content providers to concentrate on their
core business.
An additional advantage of the managed service proposition is that
providers should supply new facilities as and when the market and
technology landscape is appropriate, without significant outlay
required from the content provider.
The billing provider should also offer the advantage of managing
the entire payment process both seamlessly and securely, from
payment request and authorisation through to settlement and
customer confirmation, without disrupting the 24-hour, every day of
the year operational requirements of the client.
This relatively new industry would do well to bear in mind some of
the lessons learnt by the telecoms companies. The payment solution
must be commercially viable for content producers and convenient
and affordable for consumers.
Pricing models should be simple (per-click or flat rate), but just
as telecoms tariffs have become more complex over time, so will
tariffs for content services, suggesting that bundling will be a
key trend.
Paul Hague is managing director of professional services
consultancy iSTRAT