More sites say goodbye to free content

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Document-sharing site Scribd kicked up a firestorm this summer when it slapped a paywall around older content. Users protested loudly, both about the move itself and the lack of prior warning.

Scribd is just one of several sites to put up a paywall recently, as social media companies come under pressure to start making money.

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A site's move from free to paid often incenses users -- but sometimes the sites have no choice. Cool services don't always mean a lot when a site doesn't have a massive user base to attract venture capital, advertisements or potential buyers.

That means more Web companies may be faced with a tough choice: Start charging, or die.

The Scribd debacle: Scribd, founded in 2006, is trying the first option. The site lets users upload and share documents, as well as embed them into a web page. All Scribd features were free until July, when Scribd posted in its FAQ section about the new archiving system it had been testing for a few weeks.

After "an initial period of time on Scribd" -- users report it's two months after upload -- documents would then be available only with a daily $5 subscription, $9 monthly pass or $59 fee for the year. Users erupted with anger as they realized what was happening, and a law professor's rage-filled blog post made its way onto TechCrunch.

Scribd posted an apology on its blog, promising to notify users when their documents are about to be archived and to offer an opt-out version. Despite the user complaints, the paywall stayed in place.

Other sites go to a paid model: Scribd isn't the only previously free service to start charging.

Skysa, a service that lets website owners add a toolbar with social networking apps, announced last week it was phasing out its free service. As of Sept. 23, varying service plans will cost between $5 and $20 a month or $50 to $200 per year -- though current free account holders will get a two-month trial.

"While I am sure many of our Free users will be disappointed by this news, we hope you can understand the value behind this," Skysa said in its blog post. "At the end of the day, free is just is not sustainable and we would rather provide quality."

TeachStreet, a site that helps students find classes in their areas, was able to stay free for two years. In early April, the site "pre-announced" that it was moving to a pricing plan at the end of the month for all new class listings. TeachStreet's CEO explained the company had tried other ways to make money but ultimately failed, forcing it to start charging.

In a post on TechCrunch, the TeachStreet CEO said his customers appreciated the prior notice and he even received several supportive emails.

Charging isn't an option: Some Web companies aren't willing to forgo the spirit of free, and they'd rather close down than charge their users.

XMarks, a service that syncs Web site bookmarks across several browsers, is one that decided to shut down instead of charge users a fee. In a goodbye blog post this week, XMarks co-founder Todd Agulnick said the service had amassed 2 million users but never found a way to make money.

He said XMarks tried several ways to make money rather than charge users, including the creation of a search tool, selling advertising and putting the business up for sale. Nothing worked.

Also this month, SixApart blog network Vox announced its site would be closing on Sept. 30. The goodbye posts from both XMarks and Vox were met with an outpouring of support in the form of "we'll miss you" comments.

Bigger is better if you want to stay free ... for now: When it comes to making money, a big user base doesn't mean as much as a paying user base -- even for the huge sites.

Facebook hit 500 million user accounts in July, and the company is reportedly preparing for an IPO in 2012. But the massive social network has yet to detail a business plan that will earn it a profit.

Twitter is in the same boat. Since its creation, questions have circled about how the microblogging site can turn a profit. This month, Google (GOOG, Fortune 500) chief executive Eric Schmidt said Twitter "should be able to come up with advertising and monetization products that are very lucrative."

The massive popularity of Facebook and Twitter have kept them going so far, and at this point it's hard to imagine the Web without them.

But eventually they'll have to parlay that into a real business model. Otherwise, they may face the charge-or-die conundrum of their smaller counterparts. To top of page

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