Executive Summary

What is Paid Content?

A recent survey by VDZ/Sapient (Berlin, January 2003) defines Paid Content as;

“the digital and charged sale of content directly to the user. Content can be subdivided into different types in which it is offered, according to its format (stream, download, etc.) and topic (economy, gaming, etc.). Thus, paid content differs from paid services and syndication (the sale of content to other websites for reuse).” 

Besides this definition there are vivid discussions on a useful demarcation between services and content, most bluntly highlighted by the phenomenon of “user-generated content” for which the Internet provides a communicational platform. For a start, the above definition is helpful. In the long term, however, the notion of content needs to be opened up and reconsidered.

Why Paid Content?

The exponential growth of the Internet use since the mid 1990s raised hope that media companies would be able to finance their Internet presence with online adverts. However, in the past few (no?) business models have been proved feasible for content providers. In order to be attractive for the advertising industry, content sites had to show an impressive number of users. They achieved this by providing high-quality content, which they provided for free. However, the turnover of advertisement did not come up to one’s expectations. Nowadays, many content providers suffer the “free-of-charge culture” of which the industry is to blame itself. To maintain information sites asks for such high expenses (editorial staff, technology, marketing) that the scope of the content originally offered has been reduced – much to the disadvantage of the user. As a consequence the issue of paid content is of high relevance not just to the e-content market but to users too. Pressing questions are wide-ranging:

• Whether and how should online media orient itself at offline media?
• How is quality in content best financed: via revenues from adverts, from selling content itself, or a total different model?
• How is paid content best appointed a strategic dimension?

Why Paid Content for the EC?

Paid content is an issue needing to be addressed by the European Commission. The strategic objective of the EC-run Information Society Technologies (IST) Programme is to realise the benefits of the information society for Europe. This includes, among others:

• to ensure that the needs of individuals and enterprises across Europe are met;
• to provide the basis for sustainable growth and high added-value employment;
• to confirm Europe as a leading force, realising its full potential.

When projects funded by the European Commission aim at supporting more intelligent and user-friendly provision, access and management of content the business models behind such a provision is a challenge to be addressed by the EC. This holds true in particular when IST activities should reinforce the “access for all” premise within the information society. Thus there is the need to engage thoroughly in analysing the potentials of paid content for the sake of the European industry as much as for the European citizen.

There are currently less than five EC-funded projects which address the timely issue of paid content. To initiate more research in this area this report starts by consolidating the discussion of this ACTeN Business Roundtable and by recommending four areas for future work.

Recommendations

The following recommendations can be made for research conducted under the EC on the basis of this ACTeN Business Roundtable:

Investing in the training of cross-media editors: Providing high quality content has its price. The craft of content creation has very much changed with the advent of the internet. How does the future of editorial work look like? New training courses are required. They need to prepare editors for content creation for cross- und multi-media platforms.

Strengthening the economically mature European citizen: An ongoing discussion in the information society is dealing with the argument whether developments are driven by user-demand or technology-push. In this regard positioning users in the debate about paid content seems equally important: do users need to be forced to buy into the paid content model or do they have a say and in fact shape the content market by consuming in their own ways? For a united Europe with a rich though very fragmented culture this question is of particular significance.

Exploring reasonable pricing models: When introducing paid content there is some need for a generally excepted value-system. What is the value of a piece of information? How can sensible pricing models look like? How to tag content? In this new market of convergence laws and rules from very different markets (i.e. publishing and e-business) prevented pricing models to be established. For the sake of the European industry as well as their customers the issue of fair and reasonable pricing needs to get further explored.

Investing the future of the content industry: In current studies and statistics on the content industry SMS, flirting and dating ranks high. For the general discussion it is important to develop a way to acknowledge user-generated content without distorting these studies. So what counts as content? What is content in the era of the Internet when user-generated content takes over? Answers to these questions can be crucial for the entire content industry in the long run. An investigation of meta-level issues around content is advisable.