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.

Filed Under: business plan, economics, free


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  1. icon
    Mike (profile), 20 Sep 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.

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