No One Ever Said Free Is The Business Model -- But It Absolutely Should Be A Part Of The Business Model

from the a-little-bit-of-confusion dept

Following Rupert Murdoch's latest hints that he's going to take down the paywall at the Wall Street Journal, a bit of a debate has developed about whether or not it's a good idea. Dow Jones executives are apparently against the idea (ironically, published in a "free" article on their site). However, the WSJ's Kara Swisher is all for it. Watching the debate unravel, however, I keep seeing people arguing against the idea, using similar logic to what I saw in the comments earlier this year when I wrote about how "free" is an essential part of many business models (if you know how to leverage it). It's typified by Mark Potts, who declares: "Free is Not a Business Model," in dismissing the commentary in support of a freeing both the NY Times and the WSJ. Unfortunately, it seems like Potts is blinded by the word free and forgets to look past it. No one is saying that "free" is the business model. They're simply saying that free is a component of the business model -- just as it's been a component of business models for ages ("the free trial," "buy one, get one free" "buy now and we'll throw in a free toaster"). Arguing that free isn't a business model is missing the point. The argument is actually over how you use free as a part of your overall business model. In fact, that's exactly what Swisher is doing in her piece, where she suggests a number of related business models that are all helped if the WSJ makes its core content free. It's the same thing that we're saying when we suggest that musicians are better off making their content free. It's not that free is the business model. It's that the free stuff helps promote other business models that can make more money.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Sep 20th, 2007 @ 12:03pm

    I eonder if you actually read the page you linked to, perhaps you don't need ot as I see Techdirt expertse tends to be absolute.
    However I would point out "..Dow Jones executives, however, have made the case that there is value in keeping the Journal's Web site ... at least partially a paid site.", these are smart people who know their business so perhaps it would be worth trying to understand the case they made rather than dismissing.
    The aticle goes on to say intersting stuff, for example :
    "...Journal and the Financial Times are special cases in the newspaper world -- more specialized than general-interest papers..."
    "But making that up in advertising revenue would require the Journal to increase traffic to its site to well north of 20 million monthly unique visitor...."

    There seem to be some smart people thinking carefully about this one, but perhaps they are out witted by Techdirt "thinking" for half a second.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    RandomThoughts, Sep 20th, 2007 @ 12:03pm

    Free isn't exactly new, who doesn't give away samples?

    The Wall Street Journal makes its money via subscriptions and advertising revenue. If one goes down but the other goes up more, its a win. Transferring success in publishing to other industries could be difficult.

     

    reply to this | link to this | view in thread ]

  3.  
    icon
    Crosbie Fitch (profile), Sep 20th, 2007 @ 12:06pm

    Free of charge or free of royalty?

    Let's be clear when we talk about free, whether it's information that is free to share without royalty, or intellectual work that the producer has given away free of charge as a cost of promotion.

    'Free of royalty' doesn't necessarily mean free of charge.

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Jim, Sep 20th, 2007 @ 12:54pm

    blinded by the word free

    Your observation that many are blinded by the word "free" seems to fit many of those who disagree with you, Mike. I would add that a large proportion of those are inhibited by pre-digital concepts of intellectual property (e.g., most movie/music company execs) who worry their fingernails off that anything offering something "free" will reduce its value. Instead of seeing free as another form of advertising, they see free as a 100% discount. When free is used in a limited fashion, as in "not forever" or "all" then, it can be an advertisement for "more" or "longer" use/access/availability/whatever of the particular content/application/etc.

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    Luke Smith, Sep 20th, 2007 @ 1:26pm

    Maybe Free subscription if you are referred. Gmail

    The free subscription piece worked well for me. I've been a subscriber to wsj online for 3 years now, and get 3 email updates a day. They break stories before anyone else is incredible.

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Josh, Sep 20th, 2007 @ 1:34pm

    Re:

    these are smart people who know their business so perhaps it would be worth trying to understand the case they made rather than dismissing

    They might know a lot about journalism and finance, but they may not necessarily know a lot of about e-commerce. If they are a newspaper that makes most of their money from advertising (as I think most papers do), then why not have some free articles with advertising on them? The free model (as in free beer) makes a lot of sense with online editions with newspapers, more than the pay-wall idea I think. Also, even smart people can be wrong sometimes.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    RandomThoughts, Sep 20th, 2007 @ 2:31pm

    The Wall Street Journal has always had some free articles available. Making the whole thing free is pretty big.

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    Michael Long, Sep 20th, 2007 @ 2:33pm

    Who's the customer?

    One thing is a given, in that someone must somehow pay for the content, be it the user in the form of subscriptions or micropayments, or others, in the form of sponsorships or advertising.

    What happens, however, in a totally "free" environment when we, as readers, get content for free that in turn is totally supported and paid for by others? Who then is the real customer? In a conflict, who's interests will be served?

    I'm afraid that a lot of this falls neatly into the "be careful of what you ask for" category...

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    RandomThoughts, Sep 20th, 2007 @ 2:46pm

    Good point Michael. What happens if this "free content" that is now supported by advertising is defeated with a new system that strips out advertising (ala Tivo) that reduces revenue? What then? Product placement in the news? I think we have enough of that already.

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Shun, Sep 20th, 2007 @ 4:05pm

    Perhaps we are looking in the wrong direction

    I don't run a newspaper, so I'm no expert in making business decisions for one. One thing I've always wondered was, how do you enforce a subscription model? I'll give you an example. Say I wanted to subscribe to the Wall Street Journal, or NYT, or Slate (remember them?). Say I find 10 people with the same interest. Wouldn't it make sense to try to get all of us on 1 subscription (username/password) then to each of us buy a separate subscription? Realistically, how would anyone stop you from doing this? What if your username/password became common knowledge, and world + dog used it to log in?


    I am suggesting that perhaps the subscription model was too much of a hassle to deal with. Someone probably looked at the revenue from subscriptions, figured out the overhead it was costing them to keep track of payments, deal with irate customers, etc. and said screw it. At the same time, I am not above companies trying to charge for premium content, as long as it's understood that most folks probably won't pay for it, and a small fraction of them will look for ways to get around the pay wall.


    Who am I kidding. I don't read the "news". I only read snarky opinion pieces.

     

    reply to this | link to this | view in thread ]

  11.  
    icon
    Mike (profile), Sep 20th, 2007 @ 5:04pm

    Re:

    Free isn't exactly new, who doesn't give away samples?

    Which was exactly my point. Not sure if you think you're disagreeing here. I was pointing out that free has always been around as a response to the ridiculous argument that "free isn't a business model."

     

    reply to this | link to this | view in thread ]

  12.  
    icon
    Mike (profile), Sep 20th, 2007 @ 5:10pm

    Re:

    I eonder if you actually read the page you linked to

    Yup, I read it. Not sure why you seem to think it said something other than I said. I pointed out that free is a part of the business model, and I was simply saying that anyone who argues "free isn't a business model" is missing the point. Clearly, lots of folks are trying to figure out the business models that work.

    these are smart people who know their business so perhaps it would be worth trying to understand the case they made rather than dismissing.

    I'm not sure why you think I'm dismissing their argument, but I'd also argue the point that all of them know their business. We've already seen how many times publications have screwed up their own market by focusing too much on subscription models when those make less sense today. Look at Business 2.0 and the NY Times.

    "...Journal and the Financial Times are special cases in the newspaper world -- more specialized than general-interest papers..."

    So? I never said otherwise.

    "But making that up in advertising revenue would require the Journal to increase traffic to its site to well north of 20 million monthly unique visitor...."

    That makes two big assumptions, neither of which may be true. The first is that the only possible business model is advertising. That's false. In fact the Swisher piece I pointed to includes a number of potential business models.

    The second is the idea that the subscription revenue from the WSJ online would remain constant and needs to be "replaced." That's not necessarily true. The WSJ subscriptions have slowed in growth over time, and they're having a lot of trouble getting newer (younger) subscribers. That's a risky long term strategy. If you think it through in the long term, rather than the short term, you realize that blocking out the next generation of influencers is going to put you in a big bind in the not-too-distant future.

    There seem to be some smart people thinking carefully about this one, but perhaps they are out witted by Techdirt "thinking" for half a second.

    I've been studying, discussing, advising and consulting on this topic for over a dozen years. I'm not sure why you think I only thought about it for half a second. My predictions have proven correct time and time again and our customers know and value that. Don't think that just because it's a short post there isn't a ton of experience going into it.

     

    reply to this | link to this | view in thread ]

  13.  
    icon
    Mike (profile), Sep 20th, 2007 @ 5:13pm

    Re:

    The Wall Street Journal has always had some free articles available. Making the whole thing free is pretty big.

    The WSJ only started putting some articles up free in the last year or two (forget when exactly). Prior to that, they locked up all the news.

    As for the statement that it would be "pretty big" to make it all free, that's true, but if that pretty big allows you to make more money in the long run, why wouldn't you do it?

     

    reply to this | link to this | view in thread ]

  14.  
    icon
    Mike (profile), Sep 20th, 2007 @ 5:14pm

    Re: Who's the customer?

    What happens, however, in a totally "free" environment when we, as readers, get content for free that in turn is totally supported and paid for by others? Who then is the real customer? In a conflict, who's interests will be served?

    Newspapers already make the largest % of their money from advertising. How would this be different? In fact, this could allow newspapers to experiment with many different business models that make them *less* reliant on advertising.

     

    reply to this | link to this | view in thread ]

  15.  
    identicon
    Part Time Business, Dec 27th, 2008 @ 5:36am

    Part Time Business

    Part Time is very popular in this century. So, i have some info about part time job, part time for students and more that i could be able to share with you about part time if you have it:D I'm very appreciate if you are willing to visit my website and share to others, its also nice to know you here. Anyway, have a good day. Well, you had great site here and very good article.:D Cheers, Part Time

     

    reply to this | link to this | view in thread ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This