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www.ecommerce-guide.com/solutions/building/article.php/125451
By Don Sussis March 26, 1999 All across the Net, the sale of information products has become a popular means of revenue for corporations and entrepreneurs alike. Everything from company reports sold by online brokers to graphics and digital photos sold by artists and photographers to whole books from individual authors can now be accessed and downloaded with the click of a mouse. These new "information providers" are redefining what is bought and sold on the Net, and are creating brand new markets. The selling of digital content has gained popularity because of its unique characteristic that both the delivery of the goods (usually an electronic file) and the transfer of money for payment of the product can be accomplished on the same electronic network. The physical distribution channels and costs usually associated with the delivery of hard goods are virtually non-existant. However, the very same technology that has made the manufacturing and distribution of these products so easy is what is causing headaches and fits for merchants who sell "small ticket items."
Pitfalls and Technology Snags Another downside to the sale of electronic information over the Net is that most information on the Net today is free. Intellectual property owners have little incentive to make valuable information accessible via the Internet because of the relational costs of accepting credit cards and other means of billing that result in costs for the merchant. The cost of processing a transaction via the credit card system would destroy any profit margin on inexpensive items. Early newletters aimed at physicians tried to sell individual articles and reports, but lost out to more ambitious Web sites that posted lots of this information for free, meanwhile being underwritten by pharmaceutical companies and instrument manufacturers. The true leaders in online pay-per-view have been pornography sites. Teasers -- very graphic pictures which promise more -- are provided for nothing. However, sales are made by using the "what''s behind the curtain" gimmick. You get "access", as long as you provide your credit card number.J Charges can be for access to certain areas on the site or for "timed viewing" (pay per minute, for example). Naturally, most of these sites sell magazines and products, too.
How the Big Boys Do It Another workaround is to pre-sell "packages" of archived articles or special reports. For example, $24.95 could give a customer the right to download 10 separate documents.J This follows the "magazine subscription model" which sells a years worth of issues at much cheaper rates than individual issues.J For the merchant, some of this "discounting" makes great sense because they can more efficiently sell andJ promote services and products to repeat customers. Such customers are more valuable to advertisers, too.
Still another variation on this is to provide such services free to customers who "qualify."J For a financial site or e-trader, this might mean discounts to those clients who execute more than 30 trades a month.J A charge of $19.95 per trade thus makes "qualified customers" those who spend at least $600 a month.JAgain, this a clever way to sell individual articles/reports by pricing them within a larger revenue stream and avoding the costs of processing each transaction. One day, perhaps micropayments and digital cash will become a reality. Then it will be possible to charge per article or report on a true pay per view basis.J It is a hard road to pave for single entrepreneurs or small companies, unless they have something that is desperately needed by a well capitalized customer base. Don Sussis is an eCommerce advisor and business consultant. He frequently writes about business over the internet. He can be reached at dons@interested.com. |
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