Microsoft’s MSN UK portal will start charging for premium services.
Microsoft has stated that it will soon start to charge users for using some of the services on its MSN UK web portal. The company will offer premium content for its users and charge them an estimated $90 per year to use these additional features. However, basic services such as Hotmail web-based email will remain free.
It’s another nail in the coffin of the advertising-funded content site business model, following the recent collapse of many niche sites that have been unable to break even through advertising alone. If a site like MSN, which gets 8.5 million visitors per month in the UK alone, cannot make money in this way, then most smaller sites are unlikely to either. The collapse of the Internet boom, along with declining ‘click-through’ rates from advertising, has come as a serious blow for free content-only sites.
The problem is, how can sites like MSN make money? While charging for content has proved successful in certain specific contexts – notably pornography and the Wall Street Journal – many other providers have found that as long as what they are offering is available for free elsewhere, few people will be willing to pay for it. Only clear sector leaders can get away with charging – otherwise, traffic is just driven away.
Fortunately, there is a middle way, which appears to be the route Microsoft is adopting. The key is using compelling content to draw traffic in – and then selling to these visitors. So in Microsoft’s case, just as one example, existing Hotmail users who are fed up with bulk email could be offered a sophisticated filtering system for a fee.
However, MSN’s success is not guaranteed. One important question is exactly what these services will be. If the site is to provide eCommerce services, this may prove more successful than premium content. Another unanswered question is whether major rivals such as AOL Time Warner and Yahoo will follow MSN’s move. If not, then consumers might decide to switch to a portal where both basic and premium services are available for free.
