The Debate Is Not Free vs. Paid

from the that's-over dept

Michael Scott points us to a column by Shelly Palmer that clearly articulates a point I've tried to make in the past, but haven't been able to make that clearly: arguing "free vs. paid" is the wrong debate. Professional content is always paid for somehow -- it's just a question of how. In some cases it's a third party paying. In some cases it's a user paying. And, in some cases, it's a user paying not with money, but with something else, like time or attention, which helps give a third party the reason to pay:

Can you frame this conversation as free vs. paid? No. Not if you are trying to get someone to pay you cash directly for something that is ubiquitously available for free. Free vs. Paid is not the great debate, it's a no-brainer -- free wins! Valueless vs Valuable, Scarce vs Ubiquitous, Demanding of attention vs Commanding of attention are the debates and the winners will be the individuals and organizations that can most effectively translate the value of content into wealth.

Exactly. This is why the focus on "free" is almost always misplaced. People stop thinking once they hit that big oval zero -- and forget that free is simply a part of a larger business model, which is often about bringing in a larger audience that gives other reasons to pay.

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Forget Free, Indie Band Offers To Pay People $1 To Download Album

from the could-get...-costly dept

For all the talk about the benefits of giving away music for free as opposed to charging for it, it appears that one indie bands is going even further: it will pay you $1 to download its songs. The band, Officer Roseland, has set up a website called MyStimulusPackage.org, where it offers to pay people $1 to download its new album. You actually have the option of having the $1 sent to you via PayPal... or donated to charity (I chose to donate). It's obviously a gimmick (and, I'm guessing the band will shut down the offer if it reaches a certain budgeted amount), but as we hear all sorts of bands whining about not getting "paid" it's quite interesting to see a band go in the opposite direction.

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Newspaper Tries Going From Free To Paid

from the good-luck-with-that... dept

A few weeks back, I wrote how, economically speaking, online news has no choice but to go free over time. It's basically the same argument we've made with other versions of digital content. It's an infinite good, and there's enough competition out there that prices will get pushed to zero (which has already happened in a lot of cases). Some people took offense to this, claiming that I was wrong. The main arguments are twofold: (1) there are some online newspapers that have been able to charge and (2) free newspapers have no value and shouldn't be produced.

Let's take the second critique first. It is a complaint we've heard before, and shows a fundamental confusion over the difference between value and price, which definitely comes into play in the news business. Value is only one component of price, playing into the demand part of the equation. But, price isn't determined by demand alone. It's the intersection of supply and demand -- and if supply is infinite, then pricing pressure will drive the price to zero. That does not mean the content has no value. It can be very valuable. But that doesn't change what the price is going to be for one simple reason: some competitors will figure out how to exploit the infinite nature of the content as free, and other will find it difficult to keep up unless they do the same.

And, of course, that leads us to the first critique: that there are some newspapers that have been able to charge and seem to be doing well. Again, this is one we've discussed at length, in the past. These sorts of changes don't happen overnight, but for the most part we've seen more and more newspapers move from paid models to free models (even the NY Times realized the math didn't make sense to keep a paid version online), recognizing that even if the paid version was something of a cash cow, growth was very slow (or negative), as people were moving to free online news that was "good enough." It's the classic "innovator's dilemma." Other models for revenue are growing much faster than trying to force people to pay for news, and it's nearly impossible to get a younger generation to ever agree to pay for news. It's just doesn't make sense.

With that said, it's a bit surprising to find out that one newspaper is trying to go in the other direction. Bluffton Today, considered one of the more innovative newspaper experiments -- combining a free newspaper with citizen journalism -- has decided to try switching to a paid model. The paper itself will have a paid subscription, as will an electronic version of the paper. Its website will remain free, but that appears to be more limited than the paper itself. It will be an interesting experiment to watch, but if I had to bet, I'd say that the paper will find it difficult to get enough paying subscribers to survive, unless it comes up with something else in its business model.

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Will Others Now Line Up To Get Paid From Google?

from the bad-precedents dept

I know that many folks disagree with my view that Google's decision to settle with book authors and publishers was a huge long term strategic mistake, but it appears others are beginning to recognize the issues. Already, we've seen Harvard bail out on the deal, since it seems to work at cross purposes to Harvard's mission, but more importantly, others are realizing the implicit statement behind Google's caving: information is not free, and those who have information should line up to Google and demand to get paid. In fact, as found on Romenesko, some are wondering when newspaper and magazine execs will realize what the book scanning deal means, and start demanding the same sort of deal from Google. I would suggest it goes even further than that. If Google is setting up a pool to pay authors, and if that leads to them doing a similar thing for newspapers and magazines, why not other websites as well? Google has now set a precedent of being willing to pay in order to display works in its index, and that's going to backfire badly.

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Free Doesn't Mean Unpaid

from the follow-the-money dept

One of the problems we often run into whenever we write about economics involving "free" is that someone inevitably posts a comment saying something to the effect of "but if content creators can't make any money, they won't create content." The problem is in jumping to the conclusion that "free" to the user/reader/listener/watcher means that the content creator isn't getting paid. Nothing is further from the truth. In fact, most of the business models we talk about concerning embracing such "free" things points to ways that the content creators can make more money, while still allowing the consumption for free. Reader thepi points us to a blog post by author John Scalzi, who has long been a proponent of free e-books, where he explains that free to the reader doesn't mean unpaid to the author. It just means that the business model is slightly different; the money is coming from somewhere else other than the reader. For some, this may seem obvious -- but it's clearly a point of confusion that we run into frequently, so it's great that Scalzi is highlighting it.

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