Is Paid Subscriptions, the Next Great Trend In Online Advertising?

As respected online publications such as Salon.com, The New York Times and The Wall Street Journal removed all or most of their paid subscription models over the course of the decade, conventional wisdom formed that holding print content intended for a mainstream audience behind a pay wall was a noble but failed experiment.

But are paid subscriptions on the Internet poised to make a comeback, albeit in a different form?

There are several standard ways to make money in the highly competitive online publishing space. The dominant one for years has been free content supported by advertising, but the massive amount of supply (even of the high-quality stuff) coupled with a worldwide recession have pushed down rates that advertisers are willing to pay for ad space, squeezing profit margins for most online publishers.

TechCrunch’s MG Siegler points out a not-so-little secret about online display ads: most people couldn’t care less about them:

The web is increasingly filling up with ads. Many sites, including this one, have a bunch of them all around with the hopes that you’ll find one relevant to you, and click on it. Of course, most of you don’t. And if you do, it may be by accident.

While there are a number of other ways to make money at the online content game, such as using content to sell products and services, there are a few factors at play that could pave the way for online paid subscriptions to make major headway over the next few years.

An Anti-ad Network?
Siegler discussed online advertising while covering Contenture, an “anti-ad network” that allows publishers to group themselves together with the idea that Contenture members can pay a subscription fee to gain access to a group of member sites that have the ads removed.

Think about what the future of online browsing might look like when you take this idea to scale. For example, what if you could one day pay Contenture (or Facebook Connect, perhaps) $5 a month — a fee I’m grabbing out of the ether — with the blessed result of being able to visit thousands of high-quality web sites, absolutely ad-free? That could theoretically provide both an important revenue stream for publishers while improving the user experience at the same time.

Subscriptions For Mobile Content
Amazon, with its handheld content reader Kindle, is steadily moving forward — using a similar strategy as Apple in terms of monetizing the sale and distribution of MP3s to iPod devices — with the creation of a massive and sustainable business in getting people to pay for digital content.

While the Kindle is best known for selling books available from the Amazon.com catalog, there’s a growing number of magazine, newspaper and blog subscriptions that can be paid for using an existing Amazon account. Importantly, the Kindle is “training” a mainstream marketplace to pay for digital content, including a subscription component.

While an announcement on Wednesday (again covered by Siegler on TechCrunch) that Amazon is opening all blogs to become part of the Kindle Publishing for Blogs Beta program was not front-page news, it could be another notable step toward building the importance of online subscriptions for online publishers.

Consider, too, that the Kindle’s forthcoming DX release, with its 9.7-inch screen, has the opportunity to further challenge both the computer monitor and print for the attention of readers across the planet. Therefore “training” people to pay for content in the form of subscriptions on the Kindle may have vast repercussions for the future of digital content.

[the article was originally published at http://www.nytimes.com/external/gigaom/2009/05/14/14gigaom-paid-subscriptions-the-next-great-trend-in-online-10572.html]