(Adds comments from iAmplify CEO and updates stock price)
By Nat Worden
Of DOW JONES NEWSWIRES
Lifestyle media maven Martha Stewart said Thursday her namesake company will test a paid download model for access to a portion of its vast library of online video content next month.
Stewart, who also spoke highly of Twitter, said she has been exploring the possibility of charging consumers for online content for many years. Next month's test will make Martha Stewart Living Omnimedia Inc. (MSO) the latest media company to try charging audiences for content online, where most media is currently free.
"It has to happen," she said at a panel discussion in New York City held by investment-banking firm DeSilva & Phillips. "We will see monetization on the Web."
Details about pricing for the offering have yet to be worked out, but it's an experiment for the company aimed at finding new ways to generate additional revenue online from archival video content not currently available on its Web site. Its Web site will largely remain a free, ad-supported venture.
The company will launch the test using a platform from iAmplify that allows publishers to set up complex business rules like creating subscriptions and bundling multiple products from individual pieces of audio and video. iAmplify runs branded pages within its customers' sites that facilitate online transactions and can also be used for additional advertising.
"All the focus for online video and audio has been on the ad model, but now the ad market is down in this economy and media companies are looking for ways to monetize and leverage their content through other means," said Murray Hidary, chief executive with iAmplify. "Certain online content should be free, but premium content - really valuable content where so much production and effort has been put into it - should be charged for."
iAmplify has deals with publishers Meredith Corp. (MDP), American Media Inc., Thomas Nelson Inc. and Beliefnet.
Stewart's comments came as media companies struggle to drive revenue from online content to replace revenue being lost from traditional outlets amid the rise of the Internet. The global recession, which is weighing heavily on ad markets, appears to be accelerating the migration of audiences and ad dollars to the Web.
Major media companies like Time Warner Inc. (TWX), Walt Disney Co. (DIS), New York Times Co. (NYT) and News Corp. (NWS), the publisher of this newswire, have all been exploring online subscription models. Meanwhile, some industry veterans have warned that putting media content online for free is an unsustainable business model, while others foresee an ad-based future for the online media business.
First-quarter revenue for Martha Stewart Living Omnimedia dropped by a quarter due largely to ad declines at its magazines, and its quarterly operating loss widened from a year ago to $15.5 million.
Stewart also said Twitter, the emerging so-called microblogging technology, will likely become a powerful marketing tool for Corporate America and she would pay to use it. She noted that in 11 weeks of using the service, making about 250 tweets, she amassed a following of more than 600,000 people.
"It took me two years to get to 600,000 subscribers with Martha Stewart Living," she said. "It took a fraction of that time to get there on Twitter."
Shares of Martha Stewart Omnimedia traded recently at $3.28, up 22 cents, or 7.2%.
-By Nat Worden, Dow Jones Newswires; 201-938-5216; nat.worden@dowjones.com