A consensus is emerging among the leaders of the digital media industry, and it’s an encouraging thing.
At conferences — which seem to have spread like some upper class disease across the land (when does anyone do work anymore?) — in Palo Alto venture capital conversations, around the pools in Malibu…a light seems to be rising along the content horizon.
Here’s the word: quality content matters, and people will pay for it.
This is a complete reversal from the conventional wisdom of a year ago. Last July, I was busy presenting business plans for this news organization to potential investors.
The elevator pitch: high-quality niche content to a high-value audience — but the financial experts assured me that everyone knew that content had no value.
Really? No value? And news content in particular had no value. This verdict usually came with a sheepish shrug from a guy in a suit with an MBA from Wharton who wished it were otherwise, really.
He’d love to pay for The New York Times. Or TheWrap. But no one else will.
Just look at the music industry, everybody said. Look at the failed experiment of pay-walls at the Times, and anywhere else companies dared to charge money for content.
Quality has no value on the Internet, I was assured. It’s become commoditized (everyone loved that word.)
Guess what — in 2009, it’s a whole different story.
Now the Times is going back to considering charging for content.
At the Fortune Brainstorm conference this week, I heard the "people-will-pay-for-quality content" argument from no fewer than three speakers, including Disney’s Bob Iger, NewsCorp’s Jon Miller and AOL’s Tim Armstrong.
It’s a message that is being reinforced from different kinds of content makers across the board — movies, news, TV shows, music.
Here’s what I’m hearing:
– Internet content is undermonetized in general, and charging for content is a trend that’s coming.
– The world of content is beginning to be divided into two parts — the broad, "commoditized" stuff that you can find anywhere (celebrity shots, the bloggerhead in his pajamas commenting on events) and premium content that people will pay for.
– “You’re seeing the world split into a premium world, and a broader attentionally-monetized world,” said Miller.
– People will tolerate ads to get quality content they want to watch for free. (Hulu!)
And it’s not killing subscription competitors, says Iger. "There was a fear that a cord cutting was going on…because they are getting everything online and didn’t need it anymore.” They didn’t. Now Disney is considering a website that would charge a subscription fee.
This falls along the lines of an argument that I heard Wired editor Chris Anderson make a week ago, in discussing the future of content on the web. (See “Chris Anderson and the Economics of Free”)
If you give away a large quantity of good content, he argues, you can then charge money for the premium content.
For a lot of content companies, that’s going to mean that both subscriptions and advertising will be required to create sufficient revenue streams.
Like ESPN, which has display advertising and subscription fees. In fact, I hear ESPN is considering starting to charge for its website.
It seems we are coming around to the understanding that not all content is equal; that people will pay for something they really want.
Exhibit A: With iTunes, consumers pay for music they can get illegally. But they pay to get music of good quality and for a reasonable price.
The Wall Street Journal figured out long ago that people will pay for content. So did Bloomberg — smart guy, that Mike.
I believe we’ll start seeing such models implemented in the coming months. As Iger said: “We’re at the beginning of the beginning.”