Micropayments Seen Driving Paid Content

NEW YORK – Unique online content, such as must-have, stats-driven sports
analysis for rabid sports fans, is becoming a key driver in the growth of
micropayments and paid content in general, digital sports executives say.

“I think the music industry’s success with paid downloads will set the
stage for micropayments in sports” content, said Tom Richardson, vp and
general manager of AOL Sports, who was part of a panel discussion Monday
during Digital Media Wire’s digital sports forum here.

The panel discussion was about monetizing sports content on the Internet.

Merrill Brown, senior vice president and editor-in-chief of media player
company RealNetworks , said Apple’s per-song downloads are a key part of the successful debut of its iTunes.com online music service.

Since it first introduced its iTunes service a couple months ago, Apple said it has sold more than five million songs on its service, which includes sales of individual songs for 99 cents. The per-song sales have raised the profile of micropayments, the sports officials said.

As consumers and sports content providers become more comfortable with the technology involved with micropayments, which for this discussion were defined as payments of about $2.50 per download or less, the little-at-a-time approach may ultimately help build a larger base of paying customers, executives at the forum said.

“We’re finding it a popular format for consumers (but only) when we
introduce ways of using the current payment infrastructure, rather than trying to introduce new online currency,” said Steven Elefant, president and chief operating officer of Yaga, a company that specializes in providing back-end payment systems for content companies such as Time.com.

“We embraced the existing payment infrastructure and found that people would want to pay for content either with subscriptions, or by starting an account and then making small withdrawals based on the number of content downloads they choose,” he said.

But providers of online content are also realizing that even the most desirable sports programming has its price points — and breaking points. AOL’s Richardson warned that sports content programmers risk losing or
alienating their entire audience if they put all of their content behind a
paid firewall.

The constant balancing act — of deciding how much sports content to
provide for free in order to build a mass audience, and how much to place in
a premium category — is perhaps why micropayments are seen as a happy
medium, executives of online sporting concerns said.

Stephen Byrd, senior vice president of fantasy sporting franchise site
STATS, which specializes in providing statistics-driven analysis on a wide
range of sporting topics, said while he understands AOL’s need to serve up
unique content to its subscription base, STATS own motto is to not give
anything away for free.

That said, he also noted that STATS partner sites such as ESPN.com and
Yahoo!, are offering premium content on their heretofore free sites, but
only after they built a vast audience with free content.

STATS operates the hugely popular fantasy sports franchises, where
subscribers pay for a number of tiered levels of involvement in the
simulated free agent-trading games, including real-time scoring on games with fantasy squads built by the players.

In the case of STATS, micropayments have been a success for the site too, he said, which are in the form of transaction fees the online players incur throughout their fantasy franchise season and amount to about $70 per player on the site, Byrd said.

The bottom line about paid content and its success, added RealNetworks’ Brown is that the
content has to be “utterly unique” to the online audience. Whether that’s providing unique online applications that supplement popular broadcast programs, or providing unique content that is more than, say, recycled clips
from a television show, “it’s about creating a value proposition,” he said
of the quest to get audience to pay for online content.

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