Paid Content on a tiered structure

Reports that AT&T is planning on introducing a pre-paid card for online content show some potential new developments in the online space. If we were to follow the model further, we could see something new developing, with companies offering a basket of content for a fixed price. For example, imagine you would like to get a subscription to the Wall Street Journal online, access to some downloadable music, and latest sports stats. What if you could subscribe to a single service that would allow you to pay for all of those in one shot (and maybe receive a rebate as a result)? This is not dissimilar to the model currently used by cable television.

In the United States, cable television has what is called a tiered structure. That means that channels are grouped in packages that are then sold as a whole. The most basic service includes the regular “free” networks (for people who have low or no reception), the next package above that generally offers an extended set that includes CNN, ESPN and a bunch of other channels. Then, on the third tier, you can buy more expensive channels like HBO or Showtime, which are not supported by advertising.

If you were to draw a parallel to the online world, you would have Internet access being the basic package, then a pre-paid package which would offer access to a certain number of sites (similar to what AOL is starting to do by pulling Time and Entertainment Weekly behind its own service), and then would pay extra for a few one-off sites that may warrant it.