Media Money with Julia Boorstin

Ad Supported Models In, Subscription Based Are Out


Free is the big trend these days when it comes to TV and newspaper content on the web. Television networks and newspapers are adopting free, ad-supported models online. They're ditching pay-per-episode and subscription services to go after a bigger audience and higher profits. The new approach? More, more targeted ads.

Thursday ABC starts offering prime time shows free on AOL. NBC is offering free shows (one week downloads) on its own site. Its shows, along with partner Fox's, will be available free on when it launches in a few weeks. And NBC is also giving away its TV pilots on Amazon's Unbox service. It'll charge for later episodes if it can hook you.

The extra ad revenue is expected to be far greater than the benefit of selling downloads. ABC is doing "geo-targeting" to embed one local ad for each viewer along with three national ads in every hour of programming. This a big win for affiliates who haven't had as much opportunity to get their ad partners online.

But it's not just about ad revenue--it's about creating an audience for a show. The nets hope giving away content will gain more viewers, who will tune in on the TV, boosting ratings. There's such a big difference between a moderate and a huge success for the networks from a financial perspective, they'll do what it takes to give a show a chance to REALLY take off.

The newspapers are going the same route--the New York Times dumping Times Select. And despite the fact that the Wall Street Journal Online is highly profitable and successful, Rupert Murdoch is seriously considering dropping its subscription service. The theory? WSJ online may have a million paying subscribers, but it could have 10 million unpaid ones who would be worth more to advertisers. And especially as more people worldwide are involved with the world of finance, that potential audience is only growing.

Bottom line, more ad-watching eyeballs are worth more than fewer paying subscribers.

FYI: GE is the parent company of NBC and CNBC. ABC is owned by Disney.

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