Return of the free lunch

A year ago Microsoft started charging for access to its Webzine. It didn't work.

Creating new media for the Internet is, for all concerned, a learning process and the latest to learn a (rather painful) lesson is Microsoft. Slate, the online magazine run by the US software behemoth, has decided to stop charging for access to its service after what it admits was a miscalculation.

A year ago, Slate started charging new subscribers just under $20, in what was seen at the time as a watershed for the industry. There'd be no more free lunches. Now, lunch is free once again. "To be honest, we chickened out," said Michael Kinsley, Slate's editor. "Maybe in the future, when the Web's commonplace, people will happily pay for access to premium sites."

"We'll re-evaluate our decision about this on a regular basis," said Rogers Weed, Slate's publisher, shortly after the company announced it would start charging. But Mr Weed won't be re-evaluating very much: he has now moved on to another division of Microsoft.

Mr Kinsley wrote a humourous and self-deprecating explanation of the shift. "No, no, you see there's always been a mix of free and paid stuff," he explained. "We're just changing the mix... OK, OK, sure: We're backing down."... "Don't you feel like jerks?" he asked himself. "Not really. OK, maybe a bit. But look: This is terra incognita."

The main reason for switching back was the surprisingly strong rise in advertising, said Scott Morroe, Slate's new publisher. "The advertising market on the Web has continued to expand at a remarkable pace," he told subscribers. But one reason it began charging for content was the growing competition for advertising. "Advertising alone is not going to do it for a good number of sites," Mr Weed said just a year ago.

The other reason is more compelling. "Paid subscriptions for content (other than smut and investments) simply have not grown as expected," said Mr Kinsley. And so "the biggest problem with remaining paid was that doing so would restrict our advertising potential."

Slate will continue to charge for its e-mail services - including the review of the morning papers, that lets everyone feel they've read the New York Times, even when they haven't. It will also charge for its archives and the weekly print edition, that's downloaded from the Slate site and has proved very popular. But everything else will be free once more.

Of course, there is a premium on just capturing an audience at the moment, with everybody is seeking the maximum number of hits. But in the longer term, things may not be very different. "Web readers surf," wrote Mr Kinsley. "They go quickly from site to site. If they really like a particular site, they may visit it often, but they are unlikely to devote a continuous half-hour or more to any one site the way you might read a traditional newspaper or magazine in one sitting. This appears to be in the nature of the Web, and not something that is likely to change." And as for advertisers, they "don't seem to place any special value on reaching paying subscribers. That was a bit surprising, since traditional magazine advertisers usually require paying subscribers."

To some extent, Microsoft's retreat on Slate was just a marketing miscalculation. Salon, another webzine that competes on similar territory, never made that leap to charging for access. But it did create a special access area for "members only," with some extra features, and a range of merchandising. This seems to have been a better bet: keep the audience, but persuade a number of them that they are getting something extra, rather than - as Microsoft did - make it look as if you are taking something away.

"Our feeling was that the Web was about building a sizeable audience and community, and then selling to that community," said Salon president, Michael O'Donnell. "It wasn't about paying for content - at least not our type of content. For the most part, we think the Web has provided mostly free content."

Microsoft has had frequent reverses in its strategy for interactive media, and still doesn't seem to have got it quite right. But the Slate story also shows the flaw in treating the Net as just an extension of the media.

There is some evidence that Mr Kinsley, who came from conventional print journalism to the shiny new webzine world, hasn't found it such an easy transition. Once editor of the New Republic, one of Washington's most talked-about magazines under his tenure, he left to join Bill Gates when it seemed the Web was the future. But he's re-thought that at least once since then. He very publicly sought the editorship of the New Yorker when Tina Brown departed, but lost out to David Remnick.

Mr Kinsley has indicated, if humourously, that all may not be quite well with Microsoft. He wrote puckishly that Bill Gates took news of the decision to stop charging very badly: " `But you promised me $20 a reader,' he sobbed, borrowing a Kleenex from a nearby Nubian. `You promised, you promised, you promised'."

"Mike did not even talk to Bill about this," said Mr Weed. "Mike has been poking fun at Bill since the first issue. This is a problem for me."

Not any more it isn't.