Pay-Per-View Coming to MSNBC.com

Just months after its chief editor quit the
post
to run the subscription-based services for RealNetworks , news site MSNBC.com plans to start charging for some of its
online multimedia content.

A spokesman for the online version of cable news outlet MSNBC confirmed the
site would add a subscription-only section to its free Web audio and video
offerings early next year.

Breaking news clips and other multimedia content would remain free but
MSNBC.com plans to go the paid route for access to higher-speed streams and
editorial-specific content.

While details on exactly what would be subscription-only remains scarce,
industry watchers expect the site to sell access to live and archived copies
its highest-rated TV shows like “Hardball with Chris Matthews” and “The
Abrams Report.”

The subscription service is also expected to offer personalized packaging of
multimedia and higher-quality Web feeds but the spokesman insisted the free
service “will continue to be a significant part of our site.”

MSNBC.com, a partnership between software giant Microsoft and General Electric-owned NBC, competes directly with CNN.com
and ABCNews.com. While its competitors already sell its streams —
independently and through RealNetworks’ RealOne service — MSNBC.com have
largely avoided the paid-content bandwagon, option to remain an ad-driven
property.

But, with ad dollars scarce, analysts say the MSNBC.com premium move was
inevitable but risky. “It’s the business model du jour to start charging for
content. A lot of companies are trying it but the biggest challenge is
consumer resistance. Our surveys show consumers do not want to pay for
content,” says David Card, a media analyst for Jupiter Research.

“There’s so much unwillingness to pay for content, I’m not sure MSNBC.com
can do this without a major distribution partner. The best strategy would
be to bundle the content, like CNN.com and the others are doing with
RealOne,” Card added.

Although MSNBC.com is rated as the second most-traffic news site on the Web,
Card doubts it can successfully sell multimedia content without deals with
portals or ISPs like Yahoo , AOL or its
own MSN service.

Putting Microsoft-owned content on a rival platform like RealOne might be a
tricky proposition but Card believes joint venture is “independent enough”
to strike an out-of-property distribution deal. “At Redmond, they’d much
rather have MSNBC.com doing a deal with another Microsoft property but I
think the site’s management is quite independent. But, I think the logical
outlet would be on MSN,” he added.

Rafat Ali, publisher of the PaidContent.org site that tracks
Web-based premium offerings, shared Card’s doubts. “The interesting thing to
see would be how MSNBC.com would market this premium version. A standalone
marketing effort would be difficult to pull off, so you might see more
promotional offers through MSN. Of course, MSN has all along shied away from
any subscription services, and boasted of the sheer number of users it pulls
in. So this is perhaps a delicate balance they would have to play out,” Ali
told internetnews.com.


He said MSNBC.com could opt to promote its premium content through the
Windows Media subscription service, which is being added to the Microsoft
WM9 media player. “The closest parallel would be how CNN.com and
ABCNews.com are
packaging it through the RealNetworks’ RealOne multi-media subscription
service,” Ali added.

On average, MSNBC.com streams about 500,000 video clips but that number can
triple if there is a huge breaking news story like the events of September
11, or the Beltway sniper episode that dragged on for days.

PaidContent.org’s Ali said it was not the first time MSNBC.com had
considered subscriptions. “This one has been a long time cooking, and is
still not fully cooked, so to speak. The site has been thinking about
charging for more than a year now,” he said.

After the September 11 tragedy, Ali said the site was considering
subscription options but held off because of technical issues. “This
dilly-dallying has been going around for a while now at MSNBC.com. What I
want to know is how much of MSNBC.com’s strategy is influenced by MSN’s
strategy, and how does it fit into MSN’s current and future plans?”

“For long, the site has prided itself of independence from co-parent
Microsoft. The move, ironically, underscores MSNBC.com’s independence, where
it now seems to be under pressure to show results on its own. Contrast this
with the free leeway — and credit line — it has given to Slate,” he
added.

For Jupiter Research’s Card, the biggest challenge for MSNBC.com is trying
to figure out who its consumers are. “Competition in the Web is not measured
by medium, but by genre. News sites compete with other news sites. So,
MSNBC.com cannot view itself as competing with CNN.com of ABC.com. They are
competing with anyone offering any content on the Web and that’s a tough
sell,” he added.

Another option, too, would be for Redmond to mirror the RealOne service and
roll out a premium version of its popular Windows Media player. While some
industry watchers believe Microsoft’s WM9 will have a paid version, Card
believes such a move would be a “major shift.”

Historically, they (Microsoft) haven’t done it. They’ve maintained the
player to be free software so that would be a major shift if they came out
with a premium player. “I would expect, if a move to sell content was in
the works, it would come from the MSN (ISP and portal service) and not from
Microsoft itself,” Card added.

RealOne, which bundles and sells third party audio and video content, boasts
more than 800,000 subscribers, shelling out $9.95 a month.

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