Days of the free Internet may be numbered

Buying content and then giving it away for free is not a good business model concludes a recent study by Ovum. The report predicts that the Net's free lunch is nearing an end

Content on the Internet has always been offered to surfers for free. However, analyst and consultancy Ovum predicts that the days of the free virtual lunch are numbered.

Paying to create or acquire content, and then giving it to surfers for free "does not make for a long-term sustainable business model", is the conclusion it has come to after researching the subject in a report, "Wireless Internet Business Models: Global Perspective, Regional Focus".

"Free content provision relies heavily on revenues from transactions, wireless marketing and portal tenancy fees," Ovum noted in a statement. However, the basic problem with this model is that transaction and wireless marketing revenues are small, and are unlikely to grow in the medium term. Portal tenancy fees, meanwhile, only work when there is a large customer base and strong branding, both of which most dot-coms lack.

However, a business model based on charging users for content generally shares content fees with the content provider, with transactions and wireless marketing forming secondary revenue streams.

"The business model based on paid content is simple and transparent -- content providers know what they want and what revenues they will get," Ovum senior analyst Eden Zoller said in the release. "Users will pay for content that has a high perceived value, that is personalized and delivered in a format that suits their device of choice."

Content with high perceived value is that with an emotional or psychological pull, or that which is needed urgently. Ovum cited horoscopes as an example of the former, and stock quotes as an example of the latter.

However, Web sites that are not in the business of purveying financial data or astrological information can take heart. Ovum suggests companies offer a mixture of free and paid-for content to begin with, to "instil a sense of value"--telling customers that content is worth paying for, and dividing content into basic, free services, and premium ones which cost money.

Such a strategy also has the added benefit of providing revenues, and contributing to survival, which is increasingly becoming the name of the cyberspace game.

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