Will the Web Become a Paying Proposition?

Can the Internet endure, half-paid and half-free?

As the Net proliferates, a showdown keeps being deferred--between its current incarnation in which information is largely free, and a seemingly inevitable world where users must pay. But even as purveyors keep laying plans to exploit the Net’s commercial potential, more and more information keeps coming available free.

Since the Net’s inception, a fiercely held noncommercial ethic has taken root. Information, once produced, costs virtually nothing to disseminate electronically. Beyond the cost of paying access charges, users have grown accustomed to receiving information as a public good. The philosophers of the Net are cyber-Diggers. Like those early English egalitarians, they champion free use and equal access.

Of course, it costs something to produce information. But until now, the producer has willingly subsidized the consumer for a blend of high-minded and self-serving reasons.

Purveyors have been willing to give information away, either because they are committed to free dissemination of ideas (libraries, universities, researchers, individual Net-heads) or because they calculated that the publicity value justified the cost (political groups, corporations, publishers). The Net is another form of marketing.

A loss leader, however, is worth the cost only if it generates other business or income. Today, there is such a glut of information on the Net that nobody knows for certain whether this form of marketing is a good investment. For the moment the consumer is still king.

A handful of Internet publishers have begun charging. The Wall Street Journal, with a cornucopia of data on financial markets and corporations, initially gave it away but now charges a yearly fee. Microsoft’s yet-to-be unveiled virtual magazine, Slate, was at first conceived as a free service to attract paying customers to Microsoft’s proprietary Network, but the latest plan is to sell subscriptions.

Microsoft, like the Journal, has something of a unique franchise. Slate’s editors are gambling that with Microsoft’s immense ability to generate technically nifty multimedia, their product will be more engaging than the average free site on Internet’s World Wide Web, and that customers will pay a premium.

As businesses try to derive revenue from the Internet, there is also more direct marketing of merchandise, and even junk e-mail. But this process has been slow to take off because credit card transactions on the Net are not yet secure.

Though paid ads are also sprouting on Internet web sites, they seem alien appendages. While they invite the user to click for more information, it is not clear that they are attracting many customers. It is too easy to simply ignore them. And, reportedly, software is being developed that will screen ads out.

As my colleague Paul Starr observes, the closest parallel to the fight for the shape of the Net was the evolution of radio in the 1920s. When radio burst on the scene in 1921 and 1922, it was not at all clear whether it would be dominated by amateur users (who, along with the military, pioneered it) or whether it would be controlled by professional broadcasters.

The amateur radio operator, with his own low-power station, was the 1920s equivalent of the individual offering an Internet home page. Nor was it clear, once professional broadcasters began obtaining licenses, whether radio stations would be noncommercial services or underwritten by corporate sponsors.

After a few years of confusion, commercial broadcasters demonstrated that they could attract mass audiences by designing attractive programming, and then selling the audiences to commercial sponsors. This mostly drove out noncommercial broadcasting until government helped revive public broadcasting in the 1960s.

In Britain, however, public policy went the other way. Broadcasting remained noncommercial (and many would say, of higher quality), until commercial competitors were allowed in during the 1970s.

It may be that large corporations will gain control of the Internet by using their resources and market power to deliver a better product, for which they can either charge users or attract advertisers. Alternatively, it may be that the Net has already put down sufficiently deep roots to resist total commercialization.

There are just too many people eager to use the Net as a free bulletin board, too many ways to sort and display information, too many brilliant amateurs. Purveyors of paid services will have to be clever indeed to entirely drive out those free services.

Inevitably, as credit card rip-offs, plagiarism, junk e-mail and other commercial abuses proliferate, we will also need some form of public regulation, if only to set ground rules and direct traffic. Either way, we will likely look back on the benign anarchy of the Internet in its first decade as a more innocent time, when minnows swam with whales and it was all free.