Start-Ups Should Think About Charging for Content

More smaller companies are recognizing a need for fee-based business models.

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The Newspaper Association of America recently hosted a meeting of the nation's top newspaper executives to discuss charging for online content. Several San Francisco Bay area newspapers, including my local paper, have already announced plans to charge for news. They are joining a number of online content providers attempting to charge end-users for content.

The reason for this shift is straightforward: Advertising-supported content providers are having a hard time making money. This is especially true for traditional media companies, which tend to have higher cost structures because of their legacy offline businesses.

Many start-ups and small content companies have already recognized the need to move to fee-based business models. Open Table, for example, charges restaurants a fee for each reservation made through its service. Its recent IPO success has resulted in even more interest in fee-based services.

A number of small, online-content companies are charging for content. The IT blog network GigaOm just announced GigaOm Pro, a new service that provides premium content for $79 per year. (The blogs are still free.)

Another example is Getting In Edu, an online website targeted at high school student-athletes interested in playing in college. Getting In Edu charges $99.99 per year and provides a wide range of admissions information in addition to sports-related services.

Consumers don't like paying for content. And most online content will continue to be advertising supported and free. But consumer acceptance of paying for content is increasing as demand for specialized information grows. This is creating new opportunities for small businesses to provide fee-based premium content.

Steve King is a partner at Emergent Research, where he leads an ongoing research project to identify, analyze, and forecast the global trends and shifts affe cting small business. He blogs at smallbizlabs.com.