Tuesday, November 29, 2005

The online publishing conundrum

Fred Wilson, a venture capitalist, offers up a familiar complaint to anyone who is a heavy consumer of online content. Publishers too often inconvenience their audience by forcing upon them articles which needlessly span several pages in order to generate additional pageviews. This is done solely to raise the advertising to content ratio as each separate page viewed increases the number of ad impressions per user visit.

Their need to do this online shatters the offline notion that publishers can disregard how much content readers actually consume but still price ad space on the assumption that it will be viewed. Most readers don't read the contents of a publication cover to cover, yet advertisers pay based on the circulation numbers from the publisher. If a reader only reads a few articles, the ads that are not adjacent to those article pages won't be seen, much less inspected. Since online articles that are not clicked on don't generate pageviews, publishers have to come up with a way of creating extra ad impressions. Breaking the content up is one way to do that.

Unless publishers can find a way to raise their CPM rates, readers are stuck for the time being with this annoying practice because online, advertisers only pay for an actual impression, not an extrapolated guess about readership interest.

Tuesday, November 15, 2005

Fix on Free

What does AOL Instant Messenger, Google, and The New York Times (pre-TimesSelect) have in common? In order to generate significant early traffic and attention, the people behind these properties decided to offer their products for free to consumers. Even as they found success, the products remained free to use, both to keep their growth rates high as well as to stymie competitors who wanted to charge for their alternative offerings. As a result, they have become among the most prominent and well-trafficked properties online which most hip, technologically savvy consumers cannot do without.

What they have done is to addict consumers to the notion in order to gain their attention, information better be free. Now, for providers of information goods this is a conundrum. The production of the information certainly isn't costless, yet consumers expect it to be free. While the exact prescription may remain elusive, I predict the winners will be firms who keep consumers fixed on free.