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.

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Comments on “No One Ever Said Free Is The Business Model — But It Absolutely Should Be A Part Of The Business Model”

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15 Comments
Anonymous Coward says:

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.

Josh says:

Re: 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.

Mike (profile) says:

Re: 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.

Jim says:

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.

Mike (profile) says:

Re: 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?

Michael Long says:

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…

Mike (profile) says:

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.

Shun says:

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.

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