Pricing information goods: Free vs. pay content

Introduction Various types of information goods are available on the Internet: business news, general news, entertainment content, games, music, software, etc. At the beginning of the World Wide Web, most content was free, but since 2002, content providers have begun to charge their customers. According to a study of the Online Publishers Association (OPA, 2004), US consumers spent $1.56 billion for online content in 2003, an 18.8% increase over 2002. The proportion of content offered for free varies a lot among content providers, as online press illustrates. At one extreme, some providers – like The Wall Street Journal online – offer only pay content, while at the other extreme, some offer only free content – as the French journal Libération did for a while. In between, online press firms offer both free and pay content. For example, the online journal Salon.com offers roughly half of its content for free, and the other half to its subscribers only ($30 per year). The French newspaper Le Monde provides some of its articles for free, but full access to content is available only to its subscribers. Combinations of free and pay content are also common for other types of content: degraded versions of software or video games can be downloaded for free, but the “full” version has to be purchased; excerpts of books or songs are also available at various online stores.