Publishers Show Yet Again How To Make Money By Reducing The Price To Zero

from the once-you're-lucky,-twice-it's-a-business-model dept

One of the slogans of the copyright industries is that you can’t make money from giving things away. Unfortunately for them, examples just keep coming up showing that’s simply not true. Techdirt wrote about the interesting case of the London Evening Standard back in 2009, shortly after its new owner decided to turn it from a (loss-making) paid-for newspaper, into one that was given away. So, three years later, how did that work out?:

Andrew Mullins, the paper’s managing director, says that in the year up to 30 September [2012], the Standard managed to return a profit of just over £1m [$1.5 million].

The transformation from loss into profit is remarkable when set against the background of the paper’s enormous losses when it was a paid-for title.

At the time the paper went free, on 10 October 2009, the previous quarter’s figures, if annualised, would have registered a loss of £30m [$45 million].

Confronted by this kind of result, the copyright maximalists will probably say: so what? One success proves nothing — it can’t be generalized. But it turns out that another London publication, the weekly listings magazine Time Out, has recently made a similar move, reducing its price to zero. Not surprisingly, that has allowed it to boost its circulation hugely:

According to figures from the Audit Bureau of Circulations, Time Out had an average weekly circulation of 305,530 in the final four months of 2012, over five and a half times its 54,875-strong circulation in the same period of 2011.

Of course, giving away more copies is easy; the hard part is making money by doing so:

Although Pepper declined to comment on profit targets for the free magazine he said the Time Out business “makes money” and he hopes it will stay in profit.

Pepper said: “Ad revenue has massively exceeded our expectations. We have seen very strong double-digit year-on-year growth. You can read as much as you like in to that but the print market is not having a strong time in general.”

Given the tough economic climate, it’s impressive that not one but two companies have turned around ailing publications by giving away copies of previously paid-for titles. Of course, the copyright industries will once more dismiss these as “only” being two examples. So the question has to be: just how many dramatic success stories like these does it take before that tired old cliché about the impossibility of making money by giving things away is taken out the back and finally put out of its misery?

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Companies: london evening standard

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Comments on “Publishers Show Yet Again How To Make Money By Reducing The Price To Zero”

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42 Comments
DannyB (profile) says:

Re: One success proves nothing

One success proves nothing.

One more success still proves nothing.

Another success is just an aberration.

Another success is just a statistical anomaly.

Yet another success is just noise in the data.

Another and another and another success . . . it’s just a fad. Nothing will come of it.

More successes is disturbing.

A lot more successes. We need legislation to regulate this new danger. Before you know it, everyone will use automobiles and the beauty of the horse and carriage will be unknown to future generations. Using too much email is a danger that will cause the pest office to fall on hard times.

AB says:

Re: Re: One success proves nothing

Using too much email is a danger that will cause the pest office to fall on hard times.

I remember them making that claim. That was around the same time they wanted to start charging kids for passing around cards in envelopes without stamps, claiming that was stealing their work and that they should be getting paid for the delivery. There was some nasty backlash over that.

Josef Anvil (profile) says:

Let me take a stab at it

“Confronted by this kind of result, the copyright maximalists will probably say: so what? One success proves nothing — it can’t be generalized.”

Even though I like CwF + RtB as a formula, the elusive generalization that escapes the copyright maxilmalists is simple and they are well aware of it. The better the content, the more people will view it; the greater the interest the more advertisers will pay.

James Burkhardt (profile) says:

Re: Snake Oil

I like how you combine 2 synergistic concepts of Techdirt and establish a straw man, which you then only alue to.

You seem to believe the entirety of Techdirt is positioned at selling the world that advertising is the only way, and think all of the copyright reform demands all just lead to “moar ads!”.

I’d like to address the fallacy of this reasoning.

Techdirt expresses a belief that via the CwF+RtB core business strategy, many means of income generation are possible. One such method is traditional publishing, which is struggling in the current market. Another business plan is to give away your content to consumers, and generate income from side sources, i.e. Ads, merchandise, or “VIP” privileges (to use examples this site uses). Traditional publishing keeps claiming that “giving the content for free” is what is killing the industry, News, Music, Movies and Video Games all claim it. So Techdirt likes to highlight cases which break that claim. saying that “T, U, V, W, X, Y, and Z all made money doing it differently, there is more then the old way available” is not snake oil. Its truth.

On the copyright side, Techdirt believes that Copyright is an incentive to “promote the progress of science and the arts”, and that such the restrictions of copyright can harm society if too strong. As such, copyright restrictions need to actually provide significant value to the creator for them to be worth the risk of harm to society. When not selling content, current copyright law becomes effectively meaningless. When the direct sale of content is not your goal, you want it distributed far and wide, and the only portion of copyright you might consider valuable is attribution. Because the more people know your name (CwF), the more you can move people toward your side markets (RtB). And this is where the synergy i mentioned comes in. If content selling is no longer the only market, copyright maximalism begins to hurt many markets.

But, copyright reform when considered in its full context as presented here, goes far beyond that synergy. Techdirt pushes for IP reform. and many problems they discuss aren’t solved by more ads, and don’t just push for everything to be free. Techdirt discusses how science, Technology, and culture are not progressing because of faults in the system. Once that happens, the mission of IP, and copyright in particular, has failed.

While synergistic, Copyright reform and Business models are to linked but separate concepts, not shills for one another.

Ninja (profile) says:

You are suggesting to the copymorons to divide everything by zero and they are in desperation screaming “IMPOSSIBLE” without realizing it will give them infinity. Remember that for centuries 0 was not even considered and when it showed up divisions were more or less a taboo. Same with the compymorons. At some point they’ll go out of Middle Ages and see a bright new future dividing by zero.

Pedro Valle Javier (user link) says:

Same thing is happening here

I live in a small island with about 4 million people. We used to have 4 or 5 daily paid newspaper back in the day, which slowly turned into 3 (two of which are owned by the same company.) In the last year, one of the dailies switched to free distribution and, all of the sudden, two more free dailies appeared. Thus far, the model is working for them.

Spaceman Spiff (profile) says:

The reality of commercial publications.

The fact is, commercial publications make zip from print copies. Their main income, and all profits, are from advertising. The more eyeballs they have, the more they can make. Of all people, Rupert Murdock should be aware of this, yet his overweaning sense of entitlement has made him forget that maxim in the publishing business – no one pays for what no one reads!

Anonymous Coward says:

Re: The reality of commercial publications.

“The fact is, commercial publications make zip from print copies. Their main income, and all profits, are from advertising.”

This has always been true.

The money you paid for the newspaper could not possibly cover the cost of printing and distributing it (plus the price of paying all the editors, reporters, etc.).

Advertisement has always been the money maker.

Svante Jorgensen (profile) says:

Danish free newspaper with a circulation of over 500.000

The free danish nationwide newspaper metroXpress has been going strong for over 11 years and reportedly had a circulation of over 200.000 in 2012, according to “Dansk Oplagskotrol” (http://www.do.dk/asp/aboutdo.asp) – an independent non-profit organisation used by newspapers and advertisers in Denmark to agree on advertising rates.

out_of_the_blue says:

WHO has EVER said that advertising-supported can't work?

Can you find someone who believes that (US commercial) radio and television haven’t been supported for seven decades or so by advertising?

You’ve take your standard strawman and kicked the stuffing out of it, but all you’ve got left is some old clothes and scattered straws.

You’re casually confounding apples and oranges. Newspapers are not like movies. Here’s a real test: make a $100M movie and just give it away. — You WON’T because know there’s no practical way to stuff advertising into that content.

Take a loopy tour of Techdirt.com! You always end up at same place!
http://techdirt.com/
The only forum where “give away and pray” is taken seriously.

Anonymous Coward says:

Re: WHO has EVER said that advertising-supported can't work?

“You’re casually confounding apples and oranges. Newspapers are not like movies. Here’s a real test: make a $100M movie and just give it away. — You WON’T because know there’s no practical way to stuff advertising into that content.”

Considering we weren’t discussing movies, boy, your desperation to make your quota of posts for payment by your corporate masters is truly astounding.

DannyB (profile) says:

Re: WHO has EVER said that advertising-supported can't work?

Can you find someone who believes that using free as a promotion is the only way and that all choice should be eliminated?

You’ve take your standard strawman and kicked the stuffing out of it, but all you’ve got left is some old clothes and scattered straws.

You’re casually confounding apples and oranges. Scarce items are not like items that are infinitely copyable at zero cost. Here’s a real test: make a promotional item designed to interest people in your business, and then charge a huge price for it. — You WON’T because know there’s no practical way people will pay just to discover who you are.

silverscarcat says:

Re: WHO has EVER said that advertising-supported can't work?

Um, blue…

I think it was…

You, bob, AJ and other Copyright Apologists who have said “ad-based revenue can’t work” when someone points to it as a model.

And yet, you people also say that places like Pirate Bay and Megaupload make TONS of money off of ads.

Hmm… So which is it?

Rapnel (profile) says:

Re: Re: WHO has EVER said that advertising-supported can't work?

It’s neither and both and never has been and always will be.

Any topic that puts even a glimmer of positive light on any challenge to IP maximalism is dealt with accordingly and typically only by a fairly dependable lot. It may often result in completely awkward, hypocratic, out-of-touch, petulant and superiority complex induced word vomit but it is dealt with nonetheless. Ebb and flow or some such.. Rub and tug.. Poke and choke.

special-interesting (profile) says:

Some of my best rationalization is in this recent (a dead few days old post. Ha! Takes me a while to pick out such detail.) topic: https://www.techdirt.com/articles/20130318/11114922368/more-details-copyright-register-maria-pallantes-call-comprehensive-forward-thinking-flexible-copyright-reform.shtml#c786 On the Performance right (wrongs) enforced by current copy-wrong law.

Media being free is an old established very workable commercial concept that has been explored in depth over the last 80 years. Furthermore. It creates real incentives for the original-work’s creator to develop and add value to the original-work making it culturally viable thus more profitable.

If you must charge something make it a pittance amount. Do you (Mr/Ms Executive of large direction-less media firm) actually understand the 101 course-level topic of Available Spending cash????? If you do then you realize that the average consumer only has (atm) less than a dollar of fun money in their pocket.

Newspapers take advantage of this knowledge with average prices of $1 or less. (there are exceptions and inflation affects price but not the Available Spending ratio.) This same small amount basically goes to the small newsstand distributor harking out (would that be a prosecutable public performance?) the headlines on the street corner.

Most media is paid for 100% by contract when its purchased and this investment is recouped by advertisements and other sponsorships when played/broadcast/sent to the public. There are downstream sales opportunities but, bluntly, how do we tell our friends about it if we cant share it? (Most consumers (Yikes, only me?) watch so much media we cannot remember the name of the characters or title.)

Since any files we could provide would not include the value added stuff in the commercially sold edition (please read up on Cwf-Rtb) their will still be incentive to purchase it. James Burkhardt’s post above says that more eloquently than I.

Who Cares said something interesting: ?An important scientific innovation rarely makes its way by gradually winning over and converting its opponents. What does happen is that its opponents gradually die out, and that the growing generation is familiarized with the ideas from the beginning.?

my only comment is that we must find a way to educate kids about copy-wrong. (I meant copyright. Really I did!) Or its eternal copyright forever.

tomxp411 (profile) says:

Works for more than just newspapers...

A local summer camp near where I live was having a harder and harder time filling their roster each year. They lost campers, so they had to raise the price. When they raised the price, more people didn’t return the next year. The camp had finally reached the end of the last summer in which it could do business.

They were ready to close the doors, turn out the lights, and walk away. Then someone said, “I got an idea. Let’s invite campers to come for free. We’ll run on donations and have a lottery system to determine admission.”

A decade later, the camp is better than ever. They’ve rebuilt structures, remodeled, upgraded, and they are full to bursting every summer with grade-school children, who absolutely love their experience.

Some things just can’t be paid for.

uRspqF7L (profile) says:

i am more and more convinced by comment threads like this that massive for-profit corporations are refusing profits they could easily make and defying the law (which requires they maximize their profits by any legal means available), their Boards of Directors (which require corporations maximize their profits by any legal means available), and their shareholders (who requires they maximize their profits by any legal means available) by refusing to maximize their profits in order to piss off and hound their superheroic opponents like the commentators on this website.

txpatriot says:

So what’s your point? What if you had a MILLION examples?

MY POINT is that the decision should be up to the individual business as to whether or not they give their product or service away for free. Too many pirates take it upon themselves to decide THEY will take others’ intellectual property for free. That is not their decision to make, regardless of a million examples of free distribution turning a profit. If a business chooses NOT to give away its product or service for free, and suffers for it, that is the market speaking and that is how it should be.

But just because it works for one (or two or a million) is NO justification for forcing that business model on all.

RadialSkid (profile) says:

Re: Re:

I’ll never understand that mentality, AT ALL. You can’t see the profits for the copyright…even though the whiners would be no better off if nobody consumes their content than if individuals consume it without paying, you still insist on the former.

Personally, I believe in granting you your wish. Don’t pirate, don’t purchase. If a few more people jumped on that train, you fuckers would be BEGGING for the pirates to come back. Where there’s relevance, there’s always an opportunity for monetization, but where there’s irrelevance, there’s only irrelevance.

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