Free Gone Wrong... Or Free Done Wrong

from the it-happens dept

One of the session's at today's The Free Summit is going to be by Alex Iskold, talking about the "dangers" of free -- a subject he has written on in the past. While I starkly disagree with his position, it is one worth thinking about, and I'm looking forward to his talk. His position (in that article, at least) is that free has consequences, and those consequences can be quite negative. Personally, I find the whole "good or bad" debate to be meaningless when it comes to economics, because economics tends not to care. It's describing what is happening, and I'd rather focus on how to get the best out of that, rather than complaining about why it's somehow bad. But, that said, Alex has a good point that we should at least understand the consequences. We just disagree on how to view those consequences.

Along those lines, our keynote speaker of the day, Chris Anderson, recently posted a story of "free gone horribly wrong" written by Jon Lund, the head of the Danish Internet Advertising Bureau. It's a fascinating and worthwhile read, all about a sudden influx of "free newspapers" in Denmark that weren't just free on street corners, but were freely delivered to homes. Basically, it created a bubble, with everyone getting overwhelmed with multiple free newspapers delivered to their doors every day. The market was overly saturated and it hurt everyone and the whole thing collapsed.

It's definitely an interesting tale -- and one that I think fits with some of what Alex will say. But, I tend to wonder if this is really a case of free gone wrong or free done wrong. First, I'm always a bit skeptical of "free" business models that rely on a "free" scarcity (such as physical newspapers). While it can work in some cases, it's much more difficult. You're not leveraging an infinite good -- you're putting yourself in a big hole that you have to be able to climb out of. Second, in some ways the model that was set up was a static one where everyone focused on the "free" part, and no one looked at leapfrogging the others by providing additional value where money could be made. The trick with free is you need to leverage the free part to increase the value of something that is scarce and that you control, which is not easily copied. That wasn't the case here. Everyone just copied each other, rather than trying to offer something different and better.

Still, it's an important point that bears repeating. Free, by itself, is meaningless. Free, with a bad business model, isn't helpful either. The real trick is figuring out how to properly combine free with a good business model, and then you can succeed.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    TheStuipdOne, May 11th, 2009 @ 7:55am

    Someone Should Have

    offered to clean up peoples front steps after all these delivery people littered there. "I'll get rid of these annoying papers for you for $1 a day" clean up 100 houses and that's a good day's take

     

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

  •  
    identicon
    angry dude, May 11th, 2009 @ 7:55am

    T-Shirts, retards !!!

    Start selling T-shirts asap !

     

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

  •  
    identicon
    Chronno S. Trigger, May 11th, 2009 @ 8:19am

    Things can just go wrong

    "My shirt would say, 'I trolled with angry dude.'"

    I think I'd actually pay for that.

    Getting back on topic: Things can just go wrong. Sometimes one just catches a bad brake and they lose. This douse not happen more to the "free" models, they just have the same percentage of bad brakes, bad business models, and success as not free.

    The more I think about it, the more I think that the term "free business model" is a bad name. It douse make it sound like someone is trying to get something from nothing. I'd say a better name would be "leveraging infinite goods business model" or just "infinite goods model". Those sound like there's actual work involved and may help clear up this "free" misconception.

     

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

  •  
    identicon
    bob, May 11th, 2009 @ 8:36am

    Funny

    Where I live we have about 7 free papers, all free.
    2 get delivered to your home every week by delivery people.
    One of the things that distinguishes them from the local old line newspaper is the coverage of local civic events.
    I believe on scale they are also doing better than the local old line news paper.

     

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

  •  
    identicon
    Cro, May 11th, 2009 @ 9:01am

    In London there are 4 or 5 general commuter free papers, a free Thursday sports paper, and others besides...

    In Brighton we've probably about 6 or 7 free magazines a month - usually very glossy, with high production values, considering. The Brigton "Source" has been going as long as I can remember here - 9 years... We such a young population and a massive night life so that we can support these sorts of ventures... most of the magazines revolve around going out as listings and reviews and hence get lots of advertising from bars, clubs, pubs, different club nights, specific gigs and obviously local shops.

     

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

  •  
    identicon
    Neverhood, May 11th, 2009 @ 11:51am

    Free gone good

    I live in Denmark, and I don't think that there was a real problem with the free newspapers at any point.

    There has been free local newspapers for as long as I can remember, but they where always very local oriented, and there was usually just one in any given area.

    Then, a couple of years ago two free newspapers was launched (separately, but around the same time) which focused mainly on public transportation commuters. One covered most of the country, and the other mostly just the capital Copenhagen.
    The new thing about them was that they only had one or two short pieces written by the journalists from the publishers per newspaper, a column by some publicly known figure, and the rest was reprinted from Reuters and AP.
    This, together with advertisers with much deeper pockets than the local shops the old free newspapers had as advertisers, made the new newspapers a profitable business.

    The next couple of years several newcomers tried to copy this success, but they ultimately failed, sometimes several of them at the time.

    But this was not because the business model did not work, or that it went wrong, the market was just quickly saturated due to the relatively small size of the danish population.

    I was actually quite surprised that two could survive and even thrive with such a low amount of potential readers.

     

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

  •  
    identicon
    OKVol, May 11th, 2009 @ 12:03pm

    Free rotting in the street

    Free newspapers are a nuisance here in the heart of the USA. Renters in my neighborhood ignore them, toss them into the street, or even my yard. They didn't ask for the paper, don't want it, and don't even have an opt-out option. They become and eyesore, and the renter could even be technically fined by the city. The papers have little real news or announcements, mostly just ads that fund the beast that will not die.

    I just wish the local enforcement agencies would mandate at least an opt-out option. Free becomes a nuisance when it is undesired. We have spam filters, ad filters, do-not-call lists, do-not-check-my-credit-rating options: why not "do not litter" options?

     

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

  •  
    identicon
    Stephan Wehner, May 11th, 2009 @ 12:05pm

    filtering

    It's easier to "provide for free" when there is no filtering, sorting, prioritizing.

    But filtering is what newspapers are really about. That's what editors do.

    On the other hand, I remember hearing that big (scientific) publishers have given up running fact checks over their books, and leave it to the authors. -> Filtering is getting too expensive for them as well, even though the books are far from free.

    Stephan

     

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

  •  
    identicon
    Anonymous Coward, May 11th, 2009 @ 12:11pm

    You know – the real problem with all this is that "nothing is free" – These services come at the cost of our personal information. The model needs to shift whereby the public at large treats their IP as a form of currency – this way, people who give up their Personal Information can appropriately be compensated for the repurpose of their intellectual property.

    As an aside, but important to the maturing regulatory field that governs the liability of pii holders, Businesses who require customers to pay for services contractually assume the liability of the potential for compromise of any personal information in their care, custody and control, regardless of whether or not their Service Level Agreements try to say that they are absolved of this liability. This liability shift is happening now and will continue to mature in the coming years.

     

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

  •  
    identicon
    Josey Wales, May 12th, 2009 @ 1:24am

    The truth about us

    No one does something for free. There's no such thing. Japanese have "giri", gangs have paybacks, FSF people have glory or "flaming" and Christians have heaven. No one does something for free. NO one!

     

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

  •  
    identicon
    Jesper Sommer, May 12th, 2009 @ 2:23am

    Adding information to your article

    Hi Mike. As a Danish citizen familiar with some of the aspects you mention in the article, and as a software engineer working with both commercial and "free" (as in "beer") software, I have a few things to add.

    I think "free" can both GO wrong and be DONE wrong. The case about the free newspapers in Denmark (which really started in Sweden) is probably a bit of both.

    First of all it is important to remember that "free" for the end-consumers is not necessarily "free" for everyone else. Nothing is truely free except perhaps love and kindness. A free newspaper is extremely expensive to a LOT of people - as I am sure is also true for a lot of other "free" products. Why? Because free newspapers not only caused pain and financial agony for the established "traditional" newspapers. They also introduced very heavy costs to local recycling stations who suddenly had to process tons of old newspapers - as well as the public transportation grid in greater Copenhagen where MANY resources had to spent on cleaning up the tons of "newspaper-litter" created by sloppy readers in the trains and busses. At its peek the "free" newspapers cost the public transportation grid several extra MILLIONS for cleanup and disposal of the approx 730 tons of newspaper-waste (a whopping 80% of the total waste generated by passengers) for an urban area which by comparison is similar to about one fifth of Washington DC (a total of approx 1,1 million people).

    The "free" newspapers translated into a heavy extra cost for others - in this case the public transportation company and the municipal recycling stations. And this is just one example - I am sure that "free" really introduces heavy costs for other players in EVERY scenario you can think of. It would be interesting to see some genius (you perhaps?) invent a "total cost of free" (or perhaps "actual cost of free") calculation. I am not being sarcastic - please consider this a serious proposal.

    In your article you also state that: "Everyone just copied each other, rather than trying to offer something different and better."

    That is actually incorrect.

    Each free newspaper developed its own identity and some of them spawned a lot of new concepts and ideas for the media industry. They each had a different approach to generating their content and attracting readers. Some of them were delivered to your doorstep as a morning paper. Others were distributed by a horde of "paperboys" on the streets handing out newspapers to everybody who wanted one (at train stations, squares, rows of cars waiting for a green light in the morning traffic, etc). Some newspapers had virtually NO journalists employed - they simply copy-pasted all the telegrams from various news agencies and printed them. Others had real journalists who focused on generating their own stories and interviews, profiling themselves as a more "serious" free newspaper because they SEEKED out the news rather than just copy-pasting them from a news terminal. And some of them created homepages with a lot of 2-way communication with their readers, where readers could contribute to the newspaper contnt by writing and submitting their own articles or creating a blog about various issues (the best blog-posts would then be printed in next days physical paper).

    In the end, consumers wanted only one thing: free newspapers with absolutely no regard for the quality of the content. For that reason the obvious winner were the papers who had the smallest staff, cheapest distribution costs and simplest/cheapest homepages. The most innovative papers had to close because the heavy competition could not finance their initiatives. The few remaining papers consolidated them selves, merged, and today only two of them remains - both nearly identical in concept and content: no journalists, only news directly copy-pasted from news agencies, and a lot of ads.

    The conclusion? The "newspaper wars" in greater Copenhagen was won by the papers that were most cost-effective, had the smallest staffs, and the cheapest distribution models. The most innovative papers with quality, new services and new concepts died a slow and painful death. But please don't accuse them of not trying. They certainly did NOT just copy each other. The only common factor was the "price" (free).

    Sadly the remaining papers are just a collection of yesterdays news telegrams from various news agencies, mixed with a horde of ads. The net result is a statistical larger number of people in Denmark reading physical papers – but at the expense of quality and innovation. Not for lack of trying, but because in the end the readers simply didn’t care enough about the quality of the content. The long-term effects are hard to predict but a lets assume a worst case scenario: all newspapers 5 years from now are similar to the “winners” of the newspaper-wars. They have a sound business model for “free” (i.e. let others pay for a bunch of the related expenses, produce the cheapest possible product and deliver it using the cheapest possible channels). So, is this “free DONE right” by your definition? Perhaps it is for the investors but certainly not for society as a whole. A democratic society needs critical media with resources to SEEK the news, scrutinize political processes, and analyze the actions of corporations.

    Which brings me to the final point: the hidden cost of “free”. In this case the “free” newspapers crippled the established media. Capitalism won – which is fair enough in a world of free economics – but was it the best thing for society? I personally believe that the “free” newspaper have come at a very high cost to society. And in the long run these “free” (as in beer) newspapers are replacing other “free” (as in freedom) media which have a crucial role to play in a democratic society. A role which primitive copy-paste-newspapers can never have.

    - Jesper

     

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

  •  
    identicon
    Tom O'Leary, May 12th, 2009 @ 3:41am

    Seth Godin Chimes in

    Seth Godin discussed the free theme (at no cost) in his blog post, Too Much Free, recently as well.

    Free is fine if it includes real value to someone. If it doesn't have real value than it will lose its allure rather quickly. Lowering costs (or even giving something away) doesn't create value automatically. It is only valuable if the product or service is beneficial to someone and meets a need.

     

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

  •  
    identicon
    Lennon, May 12th, 2009 @ 5:05am

    I agree

    I agree with the sentiments of the #12. They should have to pay for personal info.

     

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

  •  
    identicon
    Paul Sheer, May 13th, 2009 @ 8:58am

    Free Software is software Done Wrong

     

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


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