Pricing online media access-
you've called the tune, now how are you going to pay the piper?
by Niall O'keefe

The life of subscription-based websites has been, by and large, poor, nasty, brutish, and short. Slate.com, which wasn't helped by being spawned by friends of the people at MSN, has struggled for three years to increase its subscription base, and has even resorted to showering free umbrellas on those who are willing to cough up the $19.95 annual subscription fee. Time.com and FT.com (the Web edition of The Financial Times) are two examples of publications which hoped to charge from the outset but remain free. Subscribers to The Economist receive complimentary access to its Web edition and archives, but others are required to pay $48 annually. What does a site have to do to make a living?

The problem is faced by all media enterprises that move online - including Computing Japan - and some solutions have been less than successful. Publications such as Harper's and Foreign Affairs provide minimal online content and are in essence advertisements for a subscription to their print editions. The one outstanding exception in the long list of failures is the Wall Street Journal whose interactive edition Wsj.com boasts over 250,000 subscribers. The WSJ has adopted a successful strategy of offering a half-price subscription for its online edition to those who already subscribe to the print edition. Thus, if your office subscribes to the print edition, then you only have to pay just under $2.50 a month to access to wsj.com. But others have not had equivalent success.

First assumptions
However, regardless of your marketing strategy, certain fundamental problems remain for publications which are on the one hand trying to meet the growing demand for quality online editions, and on the other hand trying to ensure that circulation figures for print editions stay on an even keel. This problem is taxing the minds of senior management at newspapers, magazines, and journals around the world and the most crucial questions they are asking themselves are:
(1) How to maximize revenue from the site?
(2) If subscription based, how much should the fee be?
(3) What form of access control to use?

Online advertising by impressions has been effectively used to finance sites in North America. Rates charged are based on the number of impressions per month, i.e., how frequently a company's banner appears on a site. However, for those sites charging a premium for their content, bombarding valued readers with advertisements does not go down well. Therefore, in projecting revenue and expenses for subscription sites, how much the fee charged per user should be is a key decision.

Japan's Nikkei Net
Nikkei's Japanese language news service features its flagship newspaper, the Nihon Keizai Shimbun (Japan Business Newspaper), which enjoys a daily circulation of over 3 million, making it the best selling business newspaper in the world. Nikkei decided to allow free access to its Japanese-language site and launched a comprehensive English-language site which carries daily over 100 translated articles from its Japanese newspapers. Additionally, stock quotes, company profiles, special reports on economic issues, market updates and reports, and The Nikkei Weekly (Nikkei's only English language newspaper) were added to the site to make it attractive to those who need information about corporate Japan but have not mastered the language. A fee of ´1,000 per month was selected for access to the site, which compares favorably to what subscribers to just The Nikkei Weekly were paying around the world (from ´1,300 per month in New York to ´1,500 per month in London). However, when converted into dollars, the annual subscription fee of about $100 seems on the high side, particularly for netizens outside Japan. Nonetheless, those who have subscribed have recognized that the extra cost is worth paying, given the dearth of quality and timely English-language information on corporate Japan available on the Net.

We've got the price. Now what?
Having set a reasonable price for access to a site, the next problem is deciding on how to recognize and admit the user community to the site. For group subscriptions (universities, corporations, and research institutions) one of the most common methods now used is IP address authentication. The subscribing institution guarantees to the content provider that all traffic coming from a given set of IP addresses represents legitimate traffic on behalf of the institution's user community. The resource operator then simply checks the source IP address of each incoming Web page request. This is relatively easy to deploy and manage but there are some difficulties associated with this approach. First, users are geographically confined to the IP address that is licensed to access the resource. It is not possible to access from home or from hotels when traveling on business (see sidebar "Content access goes high tech"). Second, personalized functions such as portfolios, personalized news, etc., are not available to the various users at the subscribing institution. Third, pricing for such an arrangement can be tricky. Do you charge for the number of people at an institution who could potentially access the resource or do you ask the institution to estimate the number of people that will actually regularly use and benefit from the subscription? It obviously makes more sense and seems more appropriate to opt for the latter but the ball is then in the court of the institution, and the media resource operator stands to lose the institution's business if they dispute the estimate of actual users of the site. Additionally, budgets for online media access are still a relatively new concept, so many institutions may be compelled to underestimate the number of actual users. If this happens continuously, the media operator runs the risk of seeing its print circulation figures drop dramatically (while revenue from its electronic edition remains relatively static).

Who's knocking?
For individual subscribers to online media, the most common method of authentication is credential-based, usually in the form of a user ID and password (UID & PW). Subscribers register online and are issued with access codes that they can personalize. Subscription agreements prohibit dissemination of the access codes and access can be blocked if, for example, a number of people are simultaneously logging on with the same access codes. Other infringements include dissemination of the content of the site but such infringements can be difficult to trace. Greater problems with UIDs & PWs arise when institutions register a number of users and distribute to each of them their own individual access codes. This puts the licensee institution in the awkward position of having to police its users and keep a record of all the UIDs & PWs for the diverse media resources that the institution subscribes to. It would be desirable if each individual had the same UID for each resource but this is not always possible. For these reasons, institutions are reluctant to sign up for say, 100 sets of UIDs & PWs, even though it is more attractive for the end user (personalization of account, access from anywhere, etc.). Instead, they will commonly request a small number of group UIDs & PWs and come to some sort of agreement with the resource operator over the number of estimated actual users and from which locations - globally - access will be permitted.

No good alternatives - yet
As we can see, neither IP authentication nor UID & PW-based authentication is ideal. Thus, much research is now focusing on coming up with more efficient alternatives. The most touted of the various new approaches being discussed is the X.509 certificate. In essence, an X509 certificate gives a machine credentials that support its right to make use of a name, and allows this assertion to be verified by checking with a central, easily accessed certificate authority. According to Peter Brantley, Director of Computing Services at the University of California, Berkeley, the advantages of certificates is that, " they obviate the network-based locational requirements of IP-based authentication and permit much finer-grained tracking of users as they access various parts of websites. Furthermore, certificates can be issued with expiration dates which makes account maintenance simpler for both the user and the media operator."

However, it isn't all good news with certificates. As Brantley points out, the fact that certificates are machine-based is still problematic. Users would have to download a new certificate on each machine they use and this must be acceptable to the media operator. For multiple users on a public workstation for example, it is technically possible to have unique certificates for each user but that is making life unnecessarily complicated for those who want a simple straightforward method to access valuable content. According to Dr. Clifford Lynch, executive director of the Coalition for Networked Information, (http://www.cni.org) we are still, "a year or two away from when certificates will gradually start supplanting UIDs for a large set of applications." Dr. Lynch believes that, "for mobile users, certificates will need to be stored on a portable media like smart cards, and till smart card readers on workstations become more common, certificates will see limited use in this market segment."

In the meantime, whether it is through free umbrellas, snazzier designs, or greater interactivity, marketing managers at newspapers and magazines will continue to rack their brains to come up with more value-added services in attempts to make their online editions more attractive.

This surfer for one won't complain.

Niall O'Keefe is a media writer in Tokyo.
Contact him at niallok@hotmail.com.

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