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End of the line for free Web?

End of the line for free Web?


By CNN's Abid Ali and Mayanna Dietz

LONDON, England (CNN) -- Web users around the world may soon be recalling the phrase: "There is no such thing as a free lunch."

The maxim, generally attributed to U.S. economist Milton Friedman, has been taken up by media companies which plan to end Web users' much-cherished right to roam the Net freely for content.

In an experiment watched closely by Net surfers and media firms globally, 20 of Norway's biggest media companies have decided they can no longer stomach losses at their Internet divisions.

"We cannot produce content without someone paying for it," Christian Lind, head of sales and Internet at TV-2, the biggest commercial broadcaster in Norway, told CNN. "It is hard to sell banners and get sponsorship, so the content has to be paid for."

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In a unique agreement, the television company and government-owned broadcaster NRK, along with newspaper groups Stavenger Aftenblad, Stocklink and Haugesunds Avis, have decided that users visiting their sites will have to pay for some content.

While TV-2 will not divulge how much it is spending on its Internet site, UK publishers annually splash out an average £2.6 million (4.3 million euros) on creating or acquiring content, according to global research company Forrester.

As advertisers cut back on spending during a global economic slump, media companies like German goliath Bertelsmann, France's Vivendi Universal and AOL Time Warner of the U.S., the parent of CNN, will be scrutinising Norway's experiment.

TV-2 says the decision to start charging for selected content has been driven by a dispute between content providers and telephone companies Telenor and NetCom over revenue from Short Messaging Service (SMS), or text messaging.

Telenor and NetCom have been retaining around 45 percent of all revenue from text messages, the content of which was provided by the likes of TV2.

Now the 20 Norwegian firms have combined to form a group known as Innholdsnett, that wants to control its revenue streams.

E-Solutions, an Oslo-based software house, came up with a system that allows media companies to retain their rights to content and revenue. E-Solutions plans to charge users 1,000 Norwegian crowns ($100) up front for timed access to content and then distribute the cash to media companies.

NRK has already scored a degree of success in charging for content after 3,000 people registered to view clips of comedy shows over the Web.

But the "killer" content that it is anticipated will really pull the punters in is the Norwegian football season, which kicks off after a winter break in April, TV2's Lind said.

Germany's T-Online, Europe's biggest Internet company, plans to offers clips from Bundesliga, the country's top football league, this month.

In other experiments across Europe, Britain's Independent Television (ITV) charged €2.40 for footage that was left out of its broadcast of real-life TV survival game Survivor, while Freeserve, owned by France Telecom's Internet Service Provider (ISP) Wanadoo, offered boxing fans exclusive live web casts from the Lennox Lewis camp before and after the World Title Fight with Hasim Rahman in South Africa for €1.60 a day.

In an attempt to make the Net pay after spending billions of euros to expand, Freenet and T-Online launched adult portals in Germany and Spain. Freenet's Fundorado.de offers links to soft erotic channels, while Yahoo stopped selling hard core porn videos after it came in for a barrage of criticism.

The difference between Norway and the rest of Europe is that the Norwegians are seeking to create a "level playing field" that will allow media companies access to a billing system aimed at avoiding the sort of bankcruptcies that were seen when the dotcom bubble burst.

Cool reception for Net charges

But not everyone is happy. Signe Kjøs, the Norwegian editor of IFORM magazine, told CNN that not many people were aware of the plan to charge for content. She was surprised to find that she was charged for an article from newspaper site, Aftenposten.

She said: "It will make our work a lot more difficult, because obviously we cannot pay for every single web site we want to look at. It will be too expensive and time consuming and very annoying if you pay and discover that there is nothing of interest there.

"It would probably lead us to look for information elsewhere, through other channels. As the Norwegian editor of I FORM, I browse through a lot of Web sites every day, and I seldom have use for the same one more than once."

Internet analysts at J.P Morgan said all ISP/Portals have begun to charge for content as they test consumers' appetites. This is part of the end game of "monetising" users but it is also driven, in part, by the need to diversify revenue streams.

"We believe consumers will only be willing to pay for content that is unique, enriching, entertaining, convenient or pornographic. Moreover, we believe broadband is a prerequisite for much of this content," one analyst told CNN.

The UK's BT Group, formerly known as British Telecommunications, recognised that its future growth depended on rolling out high-speed Internet access and slashed the rate it sells services to ISP. Britain has the lowest take up of broadband connections in the Group of Seven industrialised nations, while Germany has some 2.2 million homes currently connected to such services. Broadband offers users the ability to download web pages quicker and access real-time video.

But Forrester Research analyst, Rebecca Ulph, told CNN that payment for Internet content would only work if there was a barrier preventing users from getting the content free elsewhere, and providers could charge no more than the cost of a monthly magazine subscription.

"The development in Norway is interesting, but a similar strategy would be difficult to negotiate in the UK or the U.S. where there are many more content providers," she said. "In countries with large numbers of media groups, similar negotiations are more likely to take place on a media-owner basis.

"Norway's experiment might be successful because it would be difficult to find local language content for Norwegians elsewhere," Ulph added. "Users in the UK, on the other hand, would probably be quite happy to go to other English language sites from the U.S. or Canada."



 
 
 
 





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