The Internet has changed everything we do. Making new friends online prior to meeting them in person is now the norm. Mailing our monthly car insurance payment seems ancient compared to the three-minute online option. While this all-access Internet trend has been developing, we, as a society, have decided that certain things on the Internet should be free. These things include but are not limited to the news, social networking sites, music and movies.
The biggest argument supporting the zero price tag on products found on the Internet is the fact that since the birth of the Internet these things have always been free. Surely, we can’t charge for these sites after years of not charging for them.
Of course we can.
And what better time, than now, when everyone is clearly addicted to the Internet?
For years, Progressive car insurance allowed its policyholders to pay their bill online using a credit card or online check for no additional fee. Only recently did Progressive start charging a $3 processing fee. The policyholder is not aware of the charge until the end of the payment process, the confirmation page, when they have already entered their information. By this time most people would not stop what they have been doing for years just to avoid an extra three dollars. Progressive does not charge customers to view claims, current or past bills or their policy online. They simply charge for their premium service: online bill payment.
Several other online companies have had success when charging fees for their premium services. The popular photography Web site, Flickr, allows you to upload, store and share your photos. The company does offer a pro account option for only $24.95 per year that includes unlimited uploads, storage, sets and collections of photos, access to your original files, stats on your account, ad-free browsing and HD playback for high-definition video uploads. The pro status allows users more options while conveying the message that they are serious about honing their photography skills since they are willing to pay for the title of pro.
Another popular photography Web site is Picnik, which offers a place for clients to upload their own photos and add effects that are similar to those found in the Adobe Photoshop software. The company also offers a premium option at the same $24.95 per year price as Flickr. Its premium account includes unlimited uploads and storage of photos, effect applications, beauty tools, collages, fonts, stickers, and an ad-free, full screen page layout.
Picknik does not attract as many professional photographers as Flickr; they cater to creative types that are unwilling to purchase expensive software but feel comfortable paying less than $30 a year to edit personal photos.
There are many success stories of Internet companies charging for premium services. Daniel Lyons wrote, in the Aug. 3 issue of Newsweek, about Jason Katz’s Web site, Paltalk, and his success with charging clients for premium services.
Paltalk is a Web site that operates chat rooms that allow you to type, talk and video chat with others. After advertising money slowed, Katz took a risk and started charging for premium services in 2001. For free, members of the Web site can instant message and share video streams with up to 10 people. Their premium services include entering chat rooms and viewing videos from hundreds of people and are priced at $14.95 a month or $60 for the year. Katz told Lyons that his business has grown to produce annual revenue that’s in the “tens of millions.”
It seems insane that Web sites would not even attempt to charge for their extra services, as if everyone’s addiction to the site would immediately end after introducing fees. Where is their confidence in the product that they push? Charging every member of Facebook a monthly fee would result in a riot within days. We are aware of this and aren’t advocating processing fees for every Web site.
Charging for premium services does seems like a reasonable business plan that could produce profit while maintaining customer satisfaction. It is our responsibility, as a generation, to establish a successful economic plan that will generate paychecks since several careers are transitioning to online-only businesses. We do not want to look back and think of the Internet as an abandoned fad due to lack of risks in the finance department.
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