Why Does ESPN Charge Money?

I see/hear lots of anger about having to pay for Insider or ESPN3 (formerly ESPN360). I thought these articles by ESPN’s Ombudsman Don Ohlmeyer has a great explanation why content companies charge money.

Take on Insider

Summary: Insider is premium content, NOT copy-and-paste articles from the Associated Press or Reuters like many headlines or blog posts. There are dedicated researchers that do lots of statistical analysis or have inside contacts for rumors. You likely won’t find something similar on the Internet for free. Fantasy players, gamblers, and obsessive fans care about so much for this overanalysis that they would be willing to pay. If you are upset that you need to pay for the article, I challenge you to find/Google the same research for free.

There’s an unending litany of Web sites — advertising can’t possibly support them all. If these services are to exist, at some point users are going to have to cover a portion of the costs. The irony, of course, is that users don’t get their content free now. Advertising is based on the audience buying products they need, want or just crave. Incorporated in the cost of almost every item consumers purchase is a charge that can be siphoned off for advertising. So, consumers already are paying for those TV programs, radio shows, print sources and Web sites that they might think they’re getting for free.

Broadcast television has always been thought of as free TV. It had one revenue stream — advertising. But in the 1980s, premium channels began charging for programming the viewer could not see elsewhere. There was resistance at first, but as the quality and originality of the programming increased, people adjusted to subscriber fees. They may not like to pay, but they wouldn’t if they didn’t feel they were deriving significant value or pleasure.

Web content providers won’t succeed by simply relying on the old broadcast model. For ESPN, Insider is a foray into the premium market. Its readers will determine whether the content is truly proprietary or just more undifferentiated information. That perceived value will tell the story.

The premium-vs.-public debate

Take on ESPN3 (formerly ESPN360)

It costs a lot of money to get digital/online streaming rights from the leagues like MLB, NBA, FIFA, etc. You can’t pay for access directly. You need to get access through your ISP (e.g. Comcast, AT&T, Verizon, etc.) This business model is very similar to the way cable works. You don’t pay for ESPNU directly: you get it by subscribing to a provider that carries the channel, then you purchase a package that has the channel.

The mailbag has repeatedly received complaints from viewers who can’t access live game coverage on ESPN’s broadband network, ESPN360.com, and don’t understand why. The service is an online network that features more than 3,500 live events a year as well as replays. It’s available via Internet service providers in 70 percent of U.S. homes that have broadband capability. It also can be accessed on most college campuses and military bases.

The cost for fans to access the service is included in payments to their ISPs, such as AT&T, Charter, Comcast, Cox and Verizon. ESPN is continuing to gain increased participation with ISPs around the country. (Talk to your local provider to see whether it’s available in your area.)

There were also questions about the ability to record or save ESPN360.com programs. For security, antipiracy and copyright reasons, you can’t burn a disc from an event on the service. Because video on demand is available for most events, even though you can’t record, you can still retrieve an event for later screening.

ESPN360.com access