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     Leslie Walker
      Leslie hosted CEO Michael Robertson on Thursday. Read the transcript.

    Sites Find New Ways to Profit

    By Leslie Walker
    Washington Post Staff Writer
    Thursday, February 25, 1999; Page E1

    New-media mavens are still chortling over how long it took Microsoft Corp. to scuttle subscription fees for Slate, its literary Web "zine." But the software maker's belated epiphany this month that advertising is more important than subscription fees on the Web is yesterday's news. The more interesting new-media story revolves around clever new methods many Web sites are devising for wheedling money out of visitors.

    While these systems will never be the major revenue source online, they are of keen interest to the many Web publishers who are feeling left out of the Internet advertising boom. The bulk of last year's projected $2 billion in Web advertising revenue 70 percent, according to the Internet Advertising Bureau went to the Internet's top 10 sites.

    Most Web content is handed out free; at the other end of the scale are a few that have such cache they can charge for everything most are sex or financial information sites. The Wall Street Journal Interactive, for instance, manages to get 265,000 subscribers to pay as much as $59 a year.

    Think of the new systems as occupying the great expanse in between these two extremes.

    Often they mix free content with time-based, event-based and a la carte payment systems. They may draw you in with something-for-nothing, then demand payment if you want access to celebrities or multimedia content.

    A few examples:

    Time Warner got several thousand takers at $14.95 each last month when its normally free-of-charge site offered an "8 Weeks to a Healthy America" online course in which the bearded guru promised to lead members to optimum living. "People aren't just paying for Dr. Weil's daily advice," said Time New Media spokesman Graham Cannon. "It's the community people are paying for the message boards, chats and participation."

    The Internet Chess Club, with 20,000 members paying fees starting at $29 for six months, sponsored a 24-game match between world champ Garry Kasparov and Vladimir Kramanik. In a premium offering, it sold more than 400 tickets at $16 each to people who "watched" the games being played in Russia and participated in a moderated discussion with the players. offers paid, pick-and-choose access to more than 17,000 hours of downloadable sound files, including audio books, poetry, academic lectures and other events. Audible Inc. reports "tens of thousands" of customers spend an average of $15 to $18 a month for such items as half-hour daily audio summaries of the Wall Street Journal and the New York Times, at $6.95 each. Or you can hear Washington Post columnist James Glassman reading his own financial advice.

    While Slate never drew more than 30,000 subscribers, Microsoft is faring better with its Money Central site. There, more than 48,000 people are paying fees that start at $9.95 a month for premium content. But the site's success it draws nearly 4 million visitors a month and collects sizable advertising fees is largely because most of its content remains free.

    Silicon Investor is one of many financial sites that takes a hybrid approach similar to Money Central's. It allows anyone to read its stock message boards but only permits subscribers to post messages.

    Slate editor Michael Kinsley stated the obvious when he wrote that Microsoft's "spreadsheet wizards" convinced him that the extra traffic and advertising from a free site would more than exceed Slate's lost subscription fees. Perhaps more revealing, though, was Kinsley's admission that Microsoft "may have missed a couple of more fundamental truths about the Web," including the fact that "Web readers surf" and "are unlikely to devote a continuous half-hour or more" to any single site.

    The Web's click-happy nature is one reason publishers want alternatives to the old print-world subscription model. Many have worked hard on complex "micro-payments" systems that would allow people to spend a few pennies here and there, but so far, that approach has failed miserably.

    Yet the Web is about nothing if not trial and error. Many more companies are working on content-vending systems that may work.

    "Conventional wisdom on the Web isn't paying the bills," said Cornelius Willis, vice present of Qpass Inc., an Internet start-up that is peddling a digital payment mechanism to publishers. Qpass is trying to create a network in which consumers could buy content from many Web sites without having to repeatedly enter their credit card information. Next week, Qpass will announce its first big deals with what Willis calls well-known publishers of financial information.

    Willis said the company has encountered self-doubt in meetings with publishers to help them determine which portions of their sites have value, how to price them and how to collect the money: "It's almost like a session with a therapist. We say, 'Let's go through what you've really got and see what's of value.'"

    Willis said most publishers intend to offer content in the $5-to-$10 range, or about the price of a magazine. Some will use time-based systems in which prices for certain items go up or down over time.

    Should consumers buy into a la carte payment systems, the Internet might prove more hospitable to traditional print publishers.

    Even more tantalizing, the Net might deliver on its promise to create a global platform for individual creativity. A piano player in Phoenix might record and sell melodies to thousands of people at $1 each. The same might be true for novelists, software programmers, homework tutors or even could this spell freedom? Internet columnists.

    © Copyright 1999 The Washington Post Company

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