Don't count on Web content as an e-business revenue stream

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Don't count on Web content as an e-business revenue stream

Daniel Thomas
Companies providing pure content over the Internet are struggling to cope amid a climate of tumbling advertising revenues.

While e-commerce leaders such as Amazon.com and Tesco.com have proved that selling goods over the Net can be a profitable business, the recent demise of Sports.com, which had millions of unique users every month, showed that even popular sites cannot survive on advertising and limited e-commerce offerings alone.

Charging for content would appear to be the only answer, but it is a risky business move that only companies with unique offerings can afford to take, analysts have warned.

This is because, to date, users have shown no willingness to part with their cash for services that are freely available elsewhere on the Web. Forrester Research has estimated that only 1% of consumers will pay more than £7 for unlimited access to the content Web site they visit most frequently.

However, there are signs that there may be light at the end of the tunnel for online content providers, which, in turn, could provide an opportunity for traditional companies to expand their Internet offerings.

Last week, financial news site FT.com announced that it has signed up 17,000 subscribers since it launched paid-for content in May.

While these are not startling figures, the Pearson owned Web site, which offers subscription services at £75 or £200 a year, depending on the package, insisted it is on course to break even during the fourth quarter of this year.

Although FT.com has shown that a certain number of users are prepared to pay for specialised content, the fact that consumers have usually been asked to pay a one-off sum up front has been one of the main barriers holding back the paid-for content model.

The problem for content providers has been that commission charges from the credit card companies mean it is not economically viable to accept small payments online. However, the emergence of micropayments technology may go a long way towards solving this problem.

BT will next month officially launch a micropayment service which will allow consumers to buy online content and services on a "pay-as-you-go" basis via a single relationship with BT.

The service, revealed by Computer Weekly in May, will allow content providers to make new paid-for online services available to a wider market, according to Angus Porter, managing director of BT Retail's consumer division. "Consumers want to be able to access good quality content via the Internet and businesses need to be able to charge for that content if they are to grow," he said.

"This service will enable content providers to operate cost-effective charging structures for premium content in a way that does not penalise them or their customers if they are making relatively low-value purchases."

It should also be noted, however, that the use of micropayments so far in the UK has been minimal and that the technology to support it is therefore largely untested.

Sports news Web site Sportinglife.com, which began trials of the service last month, hopes that accepting micropayments - which are typically between 50p and £5 - could help the company to open up a raft of new revenue streams.

"We have not got any chargeable content at the moment, but the service will allow us to offer our users premium content, such as Premiership video clips or more detailed race previews," said Ben Warn, commercial director at Sportinglife.com. "It is key that we open up new revenue streams and we will also be looking at paid-for games, for example."

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