Two years ago, few could have predicted that the subscription model would be receiving so much airtime right now. Advertising was growing at a steady clip, particularly online, and CPMs were healthy. But then, few could have predicted the severity of the recession that was to begin in December 2007, which caused the acceleration of permanent change in some industries (banking and automotive) and has a few others on the ropes (newspaper and real estate). On another note, did you know that the average U.S. recession has lasted 17 months since 1854? Statistically, we could be out of the woods as I write this in June 2009. But I digress. Barry Diller -- whose IAC brand oversees businesses that have both subscriber and advertising-based models -- delivered a highly controversial keynote at the Advertising 2.0 Conference last week, where he called the advertising-only model unsustainable for the Web. You can read coverage in CNET. What was particularly interesting was his comment that the iPhone and its App Store is the reason why he has so much faith in the paid model. Why? A few flicks of a finger and your content or software is delivered instantly, and your account is debited or billed. Diller believes that the success of the paid Web will be largely ushered along by the ease of purchase phenomenon.
This has profound implications. Right now, it is either ridiculously easy to buy content (think Amazon, iTunes, or the App Store), or somewhat difficult. As an experiment, I intentionally searched for an obscure topic in a past Wall Street Journal article. I was taken to a page where I needed to create an account with a partner who manages archived content. Surely it is a process I would have completed if I was on a real mission for a particular piece of content, but more to the point, it illustrates just how easy the App Store is by comparison.
Last week, Steve Robinson penned a Video Insider article on the possibility of Hulu moving to a subscription model. While I don't know if that is in the cards for Hulu -- my take is that the mainstream appeal of the site (not to mention its backing by the networks) will keep it ad-supported -- he makes very good points. Quality content combined with ease of purchase is already a real business online not only for Apple, but for the MLB and Netflix. With iTunes, the App Store and AppleTV, is Apple showing us what the future will look like for the paid Web?
| Eric Franchi was part of the team that launched Undertone Networks in 2002, and currently serves as senior vice president of business development. In this role, Eric oversees the company's business development initiatives, which include forging strategic relationships and developing new revenue generation programs, while working closely with the executive team on critical endeavors. He began his interactive career at About.com. |
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