CNN looks to charge for streaming video: subscription to CNN newspass will cost $39.95 a year

Cable World, March 11, 2002 by Staci D. Kramer

CNN plans to start charging Internet users for viewing streaming video on CNN.com, CNNSI.com and CNNMoney.com.

Later this month the sites will adopt a subscription model, thereby eliminating free video--except in the case of a national emergency. For $4.95 a month or $39.95 a year, users will be able to buy a CNN Newspass, which will provide access to video across CNN's sites. The video is also available with a $9.95 minimum subscription to RealOne, Real Networks' premium streaming content service.

"We want to be able to invest in producing high quality and large quantity of digital video for our online audience. To do that costs money," says Mitch Gelman, SVP and executive producer, CNN.com. "By working with distributors and establishing a subscription model we're confident that we're going to be able to provide the best digital video anywhere." Access to nonvideo content on CNN's sites will continue to be free.

CNN.com rival MSNBC.com doesn't intend to follow suit. "Right now virtually all we do is free, and we don't intend to change dramatically in the short run," says MSNBC.com editor in chief Merrill Brown. "We think the efforts of others to move to pay en masse is for us a great opportunity."

FoxNews.com is biding its time. "We're looking at it. At this point I don't see any negative impact to us taking a wait-and-see approach," says Bert Solivan, GM, FoxNews.com. As for CNN's move, Solivan adds, "I'm surprised it took this long."

The subscription model has been under consideration for a year, but Gelman said the network doesn't have any financial projections. "We haven't set any numbers or expectations for it because the dual business model that we have set up is one we're confident is going to be successful," he said. A CNN spokesperson described CNN's online video audience as "relatively small but important."

The RealOne arrangement, which began in December, is CNN's first major wholesale deal, but is not exclusive. CNN can sell the same content to other providers, including cable operators providing broadband service and ISPs. CNN also sells advertising that can be inserted into the video stream.

"A lot of the premium content on the Web needs to be supported by subscription models because the ad market isn't buoyant enough," says Larry Jacobson, president and COO of Real Networks. The National Basketball Association and Major League Baseball were among the first to move to subscription for audio broadcasts of their games and premium content, such as video highlights.

Jacobson calls CNN's move the "next logical step." He explains, "The whole model is those who are already publishing have a great opportunity to take what they're publishing, lift out the premium parts and charge for it."