Pay Up: Era of Free Content Coming to a Close

Last Updated Dec 7, 2009 1:08 PM EST

It took the Comcast purchase of a majority of NBC Universal to finally drive this point home to me. Big media companies are done experimenting with the free vs. fee debate about how to best make money in the digital age.

They have now decided, after much experimenting with sites such as Hulu and content subscription models that you, my friends, will pay for most of the content they create. It won't be fee or free. It will be fee, with some free.

Want proof? I've got 6.5 billion reasons -- the amount of cash Comcast is paying GE for controlling interest in NBC Universal. As you know, Comcast is a very healthy cable operator that makes a living selling content to subscribers. As you'll also recall, NBC is the last-place television network that makes a living -- excuse me, loses money -- selling advertisements on TV shows to a shrinking audience.

Comcast, I suspect, has little interest in the Peacock Network's broadcast business -- one wag observed that in the 2,742-word press release about the deal, the broadcast network was not mentioned until word 2,170. Instead, NBC's real value is in its ownership of several significant cable properties including USA, Bravo, SyFy, CNBC and MSNBC.

Assuming regulatory approval, it will be fascinating to watch over the years how Comcast plays this cable/broadcast divide in its programming. But I'll bet that many successful programs that might have ended up on NBC, free to viewers, will now instead be saved for Comcast cable properties, available to subscribers only. In this new era, "30 Rock" might never be shown on NBC even though it's about NBC. And I also would wage that not many NBC programs will be available free over the Internet. Just guesses, of course. (Comcast execs are saying NBC will remain a free broadcast network.)

There are other signs that the content noose is tightening around free.

  • The New York Times is considering tiered pricing for "gold" and "silver" packages, which would supplement basic news coverage with behind-the-scenes interviews, product discounts and even previews of upcoming news stories. Expect other national and perhaps even regional papers to follow suit if the Times finds success.
  • Hulu CEO Jason Kilar hinted to the NYT recently that his site, which streams television programming with some ads for free to viewers, is likely to experiment with a subscription channel. "We never aspired to be Hulu.org," Kilar told the New York Times, referring to the popular domain used by nonprofits. Note that as part of its deal for NBC, Comcast will also acquire a third of Hulu, partnering with Fox and ABC.
  • Comcast, Viacom and other operators are at work developing "authentication systems" that will allow their subscribers, after being verified, to access streams of their popular shows. This is essentially a move to to pressure TV networks and Internet channels from putting cable-developed content over the air or on the Internet for free.
The good news for content creators and distributors is that the public might be more willing than ever to pay for stuff received on their personal computers and mobile devices. According to a nine-country survey of 5,000 people by the Boston Consulting Group, U.S. consumers would pay $3 per month while Italians would pony up $7.

Do you see what I see? Are the major media companies about to adopt a fee/free model for their content? Are you ready to pay for enhanced NYT articles or an opportunity to view "Lost" on your home PC or smart phone?

(Free content image by pr1001, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.