An All-or-Nothing Game?

Should you charge for access to your entire site or just parts of it?

As a practical rule: Online, the whole is not worth more than the sum of its parts.

Most publishers would prefer to charge for entire access. It’s the simplest way: No complex price evaluations of various parts of their content, no complex pricing plans, no installing complex transaction processing software. Just charge away!

Moreover, there’s a superficial sense of logic in charging for whole-site access.

Let’s say your site contains several specific items that are exclusive and always popular, plus many generic items users can obtain from your competitors’ sites. You might reason the people who want to access the exclusive items will pay if you charge for access to just those items or the entire site. You figure you might as well charge for access to the entire site. That way, you can generate access fees from other people, too. You’re satisfied this would maximize subscription revenues from your site.

I call that a “headlong charge.” As a business plan, charging for whole-site access makes superficial sense and assures the comfort of seeming like an intrepid business strategy.

Unfortunately, it withstands competition about as well as the headlong charge of the light brigade did in Lord Tennyson’s famous poem. Charging for access to the entire site is an intrepid plan and appears logical, but it’s foolhardy and often disastrous. These are the results suffered by most consumer sites that try it.

Here’s the simple reason why headlong charging doesn’t work online:

Most people want to access only a few things on a site; some want to access more things; but very few people want to access everything. Charging for access to your entire site is palatable only to a very few people who want to access everything. It alienates most, who want to access only a few things.

Publishers see the price as worth the value of the entire site. Most consumers, who access just a few things, feel that price is levied for access the few items they’ll see. Hence, the price becomes costlier in their minds. Most will stop using your site rather than pay for it.

If your site also generates revenues by selling advertising space, the traffic loss will negatively impact advertising revenues. This sum is often greater than any subscription revenues gained. Hence, a net revenue loss can result from charging for an entire site.

If your site doesn’t generate revenues by selling advertising (which perhaps it should), the lost traffic will certainly result in new customer losses. This wasted opportunity can’t easily be measured in cash but will markedly increase customer acquisition costs. Free content creates the traffic flow from which paid subscribers are drawn. Eliminating that traffic by charging for the entire site often creates a net revenue loss — and benefits your competitors.

A better plan is not a headlong charge, but remaining tempered. If you must charge, begin by charging for only the exclusive items on your site. That safe and dependable plan reduces the risk of antagonizing most of your readers. Consumers who want those exclusive items may be happy to pay. People who don’t want them will be happy not to have to pay for content they don’t use. You may not generate as much subscription revenue as you would if you charged for any access, but you’re also unlikely to suffer the massive traffic drops and advertising revenue losses.

A good example of a tempered plan is the paid-content strategy announced last month by Independent Digital, online business unit for London’s The Independent newspaper. Rather than charge for its entire site, Independent Digital charges only for access to Opinion page columnist and commentators; its world-renowned Middle East Correspondent Robert Fisk; crossword puzzles, and the archives. Each is considered a package of paid-access items. The newspaper’s current News, Sport, Education, Arts, Books, Films, Music, and Theatre sections remain free.

Moreover, rather than charge a blanket price for paid-access packages, Independent Digital offer flexible and articulate pricing plans: £1 for one package for 24 hours; a £5 monthly subscription per package of items (with a one-month free trial); a £30 annual subscription per package; or a £60 annual subscription to all packages.

Independent Digital’s Managing Director Richard Withey is realistic about his revenue projections. “It will be modest. This is really just a trial, and we’ll see what happens. It will probably be in the tens of thousands [of pounds], not hundreds of thousands,” he told paidContent.org.

Meet Vin at ClickZ E-Mail Strategies in New York City on May 19 and 20.