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"We shouldn't be talking about free versus paid content. It's over, end of debate," Nisenholtz said. He stressed that New York Times Digital, which, unlike many of its competitors, reported operating profit for the past two quarters, depends upon a diversified revenue stream that includes key pay services.
Consumer research released on Monday by Jupiter predicts that paid online content will generate $5.8 billion in revenue by 2006, up from the $1.4 billion projected for this year.
Online games and digital music will lead the online spending spree, accounting for $1.8 billion and $1.7 billion respectively, in revenues in 2006. In comparison, online games pulled in $260 million in revenue in 2001, while digital music accounted for $30 million last year.
However, nearly 70% of adults surveyed did not understand why anyone would pay for online content. Jupiter vice president and senior analyst David Card said: "The logical answer is to take it [free content] all away."
Perhaps consumers are privy to Card's line of thought; according to the Jupiter survey, 42% said that they would expect to have to pay for digital content over time.
The researchers suggest, however, that the wide availability of online content that now exists makes it more difficult for content providers to switch to a subscription-based service. New York Times Digital took this factor into account when, in 1995, it decided to offer the contents of its newspaper online for free, Nisenholtz said.
"When free online news is just a click away, charging doesn't make sense," he added.
Instead, New York Times Digital relies on a highly diversified revenue stream that includes advertising, paid-for classifieds, crossword puzzles, archive searches and packaged news services, although the daily news remains free.
"I strongly believe that this [free content] debate is a total red herring," Nisenholtz said. "For us, what is important is pursuing a diversity of revenue streams."
MSNBC.com, another popular news site, is also trying to walk the line between free and paid-for content.
"Pay is good and free is good and we will do both," MSNBC.com Senior Vice President and Editor in Chief Merrill Brown said at the forum. "I hope the day will never come when everything we have to give people will be behind a wall."
One point made clear at the forum's opening, however, was that there is no easy answer for when content should be offered for free and when it demands a fee.
Some successful companies have subscription-only models and some have diversified revenue streams; it depends on the business, Card said.
Nilsenholtz shared his opinion, saying that when it comes to the content question "there's no silver bullet."
Jupiter's ninth annual Media Forum ends today (Tuesday)..