Forget Content, the Money’s in Services

NEW YORK – The “free vs. paid” debate surrounding Web content continued to dominate the
discussions at the Jupiter Online Media Conference here Tuesday with a growing sentiment that the money lies in providing services instead of standalone content.

On a day when Yahoo’s chief solutions officer Tim Sanders hailed the virtue of “selling the experience,” panelists argued that content could be a valuable hook to guide paying users toward add-on services.

Jason Devitt, CEO of the popular city-guide application Vindigo said his company found a gold mine in providing a fee-based service around content, even though it created no content on its own.

“We’re not in the content business. We create no content whatsoever. But, we create value by getting information to users in a convenient place at the most convenient time. That’s what people are willing to pay for — the service,” Devitt told the gathering.

For $29.95 a year, Vindigo sells location-based access to content on PDAs but the content is provided entirely by business partners. “That content is already available for free but, because there is value in the service, people are paying for it. It’s the service that’s valuable, not the content,” Devitt argued.

Since going the premium route on October 2001, Devitt said the company was able to migrate 60 percent of freeloaders to the paid version.

Devitt’s thoughts were echoed by Michael Geller, VP of business development at Homestead. Like, Vindigo, Homestead abandoned the free, ad-supported model and opted to push its hosting and site-building tools behind the premium curtain.

“We believe in the services model. We provide the software and hosting for paying subscribers and that has worked for us,” Geller said.

The pro-services model was in stark contrast to the firm stance by the Wall Street Journal Online, which has adoped a hard-and-fast rule that valuable content costs money to produce and, therefore, must carry a price.

Jeff Titterton, VP of consumer services at PlanetOut Partners, said his company found the perfect hybrid of content and services in the online personals space. PlanetOut Partners, which runs Web properties tailored for the gay and lesbian community, attempted to push its content offerings behind the premium curtain but “did not find much success there.”

Now, the company’s biggest revenue earner is the online personals business, which allows users to post content about themselves that other users pay to access. “Because we are a niche site, it works great for us. The services around the community is what makes it work,” Titterton added.

Jim Howard, CEO of CrownPeak, said content should be primarily used as a hook to lure loyal users to pay for add-on services or software, much like Yahoo’s business model which offers lots of freebies alongside paid products like streaming media, e-mail, Web hosting and even a high-speed DSL service.

In other news from the conference, plans to roll out a fee-based “Weather Geek Tool” for hardcore weather enthusiasts. CEO Debora Wilson did not provide pricing for the new service which goes live later this year, but noted it would provide weather data and tools for would-be meteriologists and rabid fans who are willing to pay for such a service. “This is the type of highly focused, niche product that people are willing to pay for,” Wilson said.

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