Has the free web had its day?
With premium services and content, T-Online & Co. are launching another assault on consumers' wallets
With premium services and content, T-Online & Co. are launching another attack on private walletsBy Clemens HörlerThe example of Yahoo is not the only one that shows this: Very few Internet companies have succeeded in financing their websites with advertising alone. This is why there is a renewed discussion about financing models in which private users also pay for certain services.
For years, website operators spoiled their visitors with free offers. This enabled them to quickly increase their customer base, which they hoped would win them the goodwill of investors and the advertising industry. The Internet boom in industrialized countries was probably only made possible in this form, but the website operators built a cage for themselves with the free offers.
Although they grew extremely quickly, they can no longer simply slip between the cracks despite the crisis-related slimming down. In the USA, Forrester Research is predicting growth rates in online advertising for the current year to be around three times lower than in 2000, namely "only" 25 percent.
New business ideas for investors
New business ideas are therefore needed, not least to reassure investors: entry into the B2B sector, investments in e-commerce, but also new pay models for private users. This applies to services and the content sector. In the latter, financial and porn platforms have been particularly successful with fee-based offers. Recently, however, T-Online, Yahoo, the online encyclopaedia Britannica.com and the online magazine Salon.com have also announced paid content.
However, caution is advised with the new pay strategies: After all, even the New York Times has already fallen flat on its face when it wanted to charge for its online offering. For this reason, paid premium services and content are now to be added to the basic offering, which is to remain free. After all, the hard-won customers should not be chased away in droves just for the sake of advertising customers. Another problem is the payment of individual offers worth one or two francs. Payment models suitable for the masses have not yet established themselves on a broad basis.
T-Online.ch will soon be using
Pay offers
In Switzerland, T-Online plans to offer fee-based content as early as this fall, which will be paid for both by subscription and in the form of so-called micropayments by credit card. "Financing a horizontal portal solely through advertising and e-commerce investments does not work," explains Günther Nierlich, CEO of T-Online Switzerland. Many customers are prepared to pay for special quality and convenience. Nierlich sees potential areas such as finance or entertainment. Yellowworld, for example, has already launched a paid premium service with Ymail secure, which can be used to encrypt emails.
Other portal operators are also currently thinking about paid content. Strategists see a new opportunity in the broadband sector in particular. According to Melanie Schneider, Media Relations Bluewin, paid content could be considered in the broadband sector in the medium to long term. "In the medium term, paid content must become a basis for us," also emphasizes Eric W. Zeller from SwissOnline.
Large Swiss media companies are still reluctant to pay for content. This is due to the fact that their websites - probably because of their traditionally good relationships with the advertising industry - generate relatively high advertising revenues compared to similarly highly frequented websites. Publishers also use the medium to retain print customers.
According to Urs Frei, Project Manager New Media, the Basel media group, for example, is planning prime value content or services, such as an advisory service on beobachter.ch or special dossiers that will only be accessible to subscribers. For most online newspapers, archive use will be subject to a charge or linked to print subscriptions. According to Marcel Sennhauser, Head of Interactive Media at Tamedia, no free content strategy will be pursued in the area of new technologies such as WAP or GPRS as long as no direct sources of income for content providers are apparent.
To earn money online,
clear USP is needed
Kurt Isler, Manager of MSN Switzerland, is building on paid premium services on the MSN service portal. Isler is rather skeptical when it comes to paid content: in Switzerland, there are currently still too few offerings with a USP and relevant content for which money can be charged. "The current online news offering in Switzerland is still pretty standardized." Isler also does not yet see any major opportunities to charge money in the broadband sector due to the current transmission quality.
More potential with
Targeted online advertising
Instead, he sees great potential in the currently disappointing online advertising sector, "not necessarily in classic banner advertising, but with genuine online marketing campaigns that are developed in close cooperation with advertising partners."
Reto Hartinger, Head of Marketing at Search.ch, also believes that the possibilities of online advertising are far from exhausted: "You just have to get it right. It's mainly people looking for new forms of advertising on the Internet who haven't understood the old ones. Banners without a message have no effect. Banners need to be used for more targeted communication, then they work extremely well."
Particularly in the area of targeting - via e-mail, banners or other forms of advertising - Internet companies could recommend themselves to advertising customers even more than before. The introduction of new and larger advertising formats may also attract more attention to online advertising, at least in the short term. Jim Sterne, an online marketer from the very beginning, believes that online advertising simply needs time to find the right place in the marketing mix. "The light has not burned out, but will continue to shine in the future."
For years, website operators spoiled their visitors with free offers. This enabled them to quickly increase their customer base, which they hoped would win them the goodwill of investors and the advertising industry. The Internet boom in industrialized countries was probably only made possible in this form, but the website operators built a cage for themselves with the free offers.
Although they grew extremely quickly, they can no longer simply slip between the cracks despite the crisis-related slimming down. In the USA, Forrester Research is predicting growth rates in online advertising for the current year to be around three times lower than in 2000, namely "only" 25 percent.
New business ideas for investors
New business ideas are therefore needed, not least to reassure investors: entry into the B2B sector, investments in e-commerce, but also new pay models for private users. This applies to services and the content sector. In the latter, financial and porn platforms have been particularly successful with fee-based offers. Recently, however, T-Online, Yahoo, the online encyclopaedia Britannica.com and the online magazine Salon.com have also announced paid content.
However, caution is advised with the new pay strategies: After all, even the New York Times has already fallen flat on its face when it wanted to charge for its online offering. For this reason, paid premium services and content are now to be added to the basic offering, which is to remain free. After all, the hard-won customers should not be chased away in droves just for the sake of advertising customers. Another problem is the payment of individual offers worth one or two francs. Payment models suitable for the masses have not yet established themselves on a broad basis.
T-Online.ch will soon be using
Pay offers
In Switzerland, T-Online plans to offer fee-based content as early as this fall, which will be paid for both by subscription and in the form of so-called micropayments by credit card. "Financing a horizontal portal solely through advertising and e-commerce investments does not work," explains Günther Nierlich, CEO of T-Online Switzerland. Many customers are prepared to pay for special quality and convenience. Nierlich sees potential areas such as finance or entertainment. Yellowworld, for example, has already launched a paid premium service with Ymail secure, which can be used to encrypt emails.
Other portal operators are also currently thinking about paid content. Strategists see a new opportunity in the broadband sector in particular. According to Melanie Schneider, Media Relations Bluewin, paid content could be considered in the broadband sector in the medium to long term. "In the medium term, paid content must become a basis for us," also emphasizes Eric W. Zeller from SwissOnline.
Large Swiss media companies are still reluctant to pay for content. This is due to the fact that their websites - probably because of their traditionally good relationships with the advertising industry - generate relatively high advertising revenues compared to similarly highly frequented websites. Publishers also use the medium to retain print customers.
According to Urs Frei, Project Manager New Media, the Basel media group, for example, is planning prime value content or services, such as an advisory service on beobachter.ch or special dossiers that will only be accessible to subscribers. For most online newspapers, archive use will be subject to a charge or linked to print subscriptions. According to Marcel Sennhauser, Head of Interactive Media at Tamedia, no free content strategy will be pursued in the area of new technologies such as WAP or GPRS as long as no direct sources of income for content providers are apparent.
To earn money online,
clear USP is needed
Kurt Isler, Manager of MSN Switzerland, is building on paid premium services on the MSN service portal. Isler is rather skeptical when it comes to paid content: in Switzerland, there are currently still too few offerings with a USP and relevant content for which money can be charged. "The current online news offering in Switzerland is still pretty standardized." Isler also does not yet see any major opportunities to charge money in the broadband sector due to the current transmission quality.
More potential with
Targeted online advertising
Instead, he sees great potential in the currently disappointing online advertising sector, "not necessarily in classic banner advertising, but with genuine online marketing campaigns that are developed in close cooperation with advertising partners."
Reto Hartinger, Head of Marketing at Search.ch, also believes that the possibilities of online advertising are far from exhausted: "You just have to get it right. It's mainly people looking for new forms of advertising on the Internet who haven't understood the old ones. Banners without a message have no effect. Banners need to be used for more targeted communication, then they work extremely well."
Particularly in the area of targeting - via e-mail, banners or other forms of advertising - Internet companies could recommend themselves to advertising customers even more than before. The introduction of new and larger advertising formats may also attract more attention to online advertising, at least in the short term. Jim Sterne, an online marketer from the very beginning, believes that online advertising simply needs time to find the right place in the marketing mix. "The light has not burned out, but will continue to shine in the future."
