Burned Media Ltd (BUNM)

[Pass the Salt]

Diller Calls Free Web Content a ‘Myth, Joins Refrain


By Brett Pulley and Andy Fixmer

July 24 (Bloomberg) -- Barry Diller, chairman and chief executive officer of IAC/InterActiveCorp, said Web users will have to pay for what they watch and use, joining the refrain of media moguls who say an era of free Internet content is ending.

The media and technology executive, whose company runs the Ask.com search engine and the Match.com dating service, said it’s “mythology” to view the Internet as a system of free communications.

“It is not free, and is not going to be,” Diller said today at the Fortune Brainstorm conference in Pasadena, California. In addition to IAC, he is chairman of Expedia Inc., the online travel service, and Ticketmaster Entertainment Inc.

Diller, 67, joined a group of media chiefs, from Liberty Media Corp.’s John Malone to Walt Disney Co. CEO Robert Iger, who are challenging the accepted model that consumers pay for Internet access and then content is free. Diller predicted there will be three revenue streams: advertising, subscriptions and transactions.

Disney, the world’s biggest media company, is developing a subscription-based product for the Internet, Iger said on July 22 at the conference.

The Burbank, California-based company has opportunities to increase sales from the Web, Iger said. Online advertising can be improved, and marketers can target consumers by tracking their activities and interests. Subscription products are particularly promising to the company.

‘Willing to Pay’

“We have ample evidence both in traditional and new media that people are willing to pay for quality, to pay for choice and to pay for convenience,” Iger said. “And they are willing to pay for what they perceive as value.”

Companies from Disney to New York Times Co. are seeking ways to get more revenue from the Internet and counter the loss of traditional media subscribers and advertisers.

New York Times said in a survey of print subscribers this month that it’s considering a $5 monthly fee for access to its namesake newspaper’s Web site. The company also asked whether existing print subscribers would be willing to pay a discounted fee of $2.50 a month for access to the site. Nytimes.com, the most visited among newspapers’ sites, is currently free.

Yesterday, the newspaper publisher reported second-quarter profit almost doubled as the company cut jobs and wages to cope with a deepening advertising slump. Revenue declined 21 percent.

News Corp.

News Corp., publisher of the Wall Street Journal and owner of the Fox TV and film studios, plans to increase revenue at its Internet businesses by charging customers for news and entertainment, Jonathan Miller, the company’s chief digital officer, said yesterday at the conference.

Going forward, some companies will have material people are willing to pay for, and others won’t, said Miller, chief executive officer of News Corp.’s Digital Media Group.

Journalism will increasingly become a “paid model” online, said Miller. The Wall Street Journal already charges for online subscriptions.

In the quarter ended March 31, News Corp.’s interactive revenue declined 11 percent to $187 million, led by a 16 percent decline in advertising at sites including MySpace.

IAC, based in New York, fell 12 cents to $17.91 at 4 p.m. New York time in Nasdaq Stock Market trading. It has gained 14 percent this year. News Corp. Class A rose 2 cents to $9.89.

New York Times rose 16 cents to $6.66, while Disney fell 22 cents to $26.58, both on the New York Stock Exchange.

To contact the reporters on this story: Brett Pulley in Los Angeles at [e-mail]; Andy Fixmer in Los Angeles at [e-mail]
Last Updated: July 24, 2009 17:32 EDT