News Corp. Digital Boss Says Free Doesn't Work, Doesn't Bother To Explain How Pay Will Work

from the good-luck dept

A bunch of folks have been sending in various versions of the fact that News Corps. digital media boss Jon Miller apparently said that "free doesn't work," though that isn't quite what he actually said. He said that ad-supported content doesn't work. Now, it may be true that he's making the (false) assumption that the only way to make money off of free content is advertising, but that's not the same as saying "free" doesn't work. Either way, I'd argue he's wrong. Ad supported free content has been shown for ages to work in various different ways if you do it right. Perhaps the problem is that he's not doing it right. Either way, his suggestions for where News Corp. is heading don't sound very promising:
"It's pretty clear that there has to be some recognition of value," said Jon Miller.... Miller noted that Web companies will have to figure out a way to charge consumers for content they have grown accustomed to getting for free, noting that cable television service providers learned how to charge for television shows. Miller also said he expected to see the rise of Internet micro-payments.
If there's one nearly universal truth out there, it's that you can never go back to charging for content people were used to getting for free. You may be able to charge for new content or services, but never what they're already used to getting for free.

But the real root of the problem is Miller's opening statement. That there needs "to be some recognition of value." There is a recognition of value. Otherwise people wouldn't consume your content. But that doesn't mean they'll pay for it. Notice what he doesn't say. He never says that they need to give people a reason to buy. He's talking about putting up a paywall, not providing a reason to buy. That's destined to fail.

The reason that cable providers learned to charge for television shows was because there was a scarcity there... and even then there's a big push to break out of that and move to free television shows online as well. Trying to cram the internet into that dying model sounds like a terrible idea.

The most ironic thing about all of this is that, if anyone should understand all of this, it's Jon Miller. After all, he was the one who realized that AOL's walled gardens were killing the company, and put in place its strategy of opening up and going free. So now he wants to do the opposite for Fox Interactive? Good luck!


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, May 29th, 2009 @ 12:41pm

    Value.

    This is one of those things that Mike has a hard time grasping. There is more than one definition of value. Mike's definition of value is sort of like the pat on the back your got from your high school football coach.

     

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      :Lobo Santo (profile), May 29th, 2009 @ 12:47pm

      Re:

      Hello Coward!
      Ya know, there're dictionaries available online--and free!
      If you don't know what something means, feel free to look it up. Here, let me help you:

      value –noun
      3. the worth of something in terms of the amount of other things for which it can be exchanged or in terms of some medium of exchange.
      Definition of Value Follow the link for the complete definition.

       

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        Anonymous Coward, May 29th, 2009 @ 1:31pm

        Re: Re:

        Here this might help and! It exactly prooves anomyous-!’s point, not yours.
        Meaning of VALUE
        http://www.hyperdictionary.com/search.aspx?define=value
        Pronunciation: 'valyoo
        1. [n] relative darkness or lightness of a color; "I establish the colors and principal values by organizing the painting into three values--dark, medium...and light"-Joe Hing Lowe
        2. [n] the quality (positive or negative) that renders something desirable or valuable; "the Shakespearean Shylock is of dubious value in the modern world"
        3. [n] a numerical quantity measured or assigned or computed; "the value assigned was 16 milliseconds"
        4. [n] an ideal accepted by some individual or group; "he has old-fashioned values"
        5. [n] the amount (of money or goods or services) that is considered to be a fair equivalent for something else; "he tried to estimate the value of the produce at normal prices"
        6. [n] (music) the relative duration of a musical note
        7. [v] estimate the value of; "How would you rate his chances to become President>"; "Gold was rated highly among the Romans"
        8. [v] place a value on; judge the worth of something; "I will have the family jewels appraised by a professional"
        9. [v] regard highly; think much of
        10. [v] fix or determine the value of; assign a value to, as of jewelry or art work
        11. [v] hold dear; "I prize these old photographs"

         

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          Tgeigs (profile), May 29th, 2009 @ 1:35pm

          Re: Re: Re:

          "Pronunciation: 'valyoo"

          Huh, and here I've been pronouncing it "Val-way"...

           

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          Anonymous Coward, May 29th, 2009 @ 2:16pm

          Re: Re: Re:

          Thanks. Every time Mike reads value, he thinks of it in one way, when often the people using the word mean one of the other meanings. In this case, mike is 2, where the speaker is thinking more like 5.

          It's one of Mike's little blind spots that makes this blog so much more interesting.

           

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            Anonymous Coward, May 29th, 2009 @ 4:04pm

            Re: Re: Re: Re:

            In this case, mike is 2, where the speaker is thinking more like 5.

            It's one of Mike's little blind spots that makes this blog so much more interesting.

            5. [n] the amount (of money or goods or services) that is considered to be a fair equivalent for something else; "he tried to estimate the value of the produce at normal prices"

            Seems AC, that you have a blind spot when looking at anything past "money". Mike's fits def no. 5 as well, when you strike out that very greedy word.

             

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              Anonymous Coward, May 29th, 2009 @ 6:13pm

              Re: Re: Re: Re: Re:

              Not at all. Mike looks at everything with value as "pat on the back" stuff, and the money will come later maybe. But in the real world of business, you have to make money somewhere.

              Ad supporting? Mike just has to ask Chris Anderson from Wired how that model works - Wired has lost more than 50% of it's ad income and more than 55% of it's ad pages, according to reports I have seen online. So we face an issue where the model that is mst often suggested as converting that "value" into "money" isn't working out.

              "Value" can't make a company run (although they can get all sorts of Angel financing for projects that don't work... another story Mike want to explain one day).

               

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                Mike Masnick (profile), May 29th, 2009 @ 6:39pm

                Re: Re: Re: Re: Re: Re:

                Not at all. Mike looks at everything with value as "pat on the back" stuff, and the money will come later maybe. But in the real world of business, you have to make money somewhere.

                I don't understand why you keep repeating this, when we have been quite clear that we believe the exact opposite. Give it away and pray is a bad business model. We talk up the importance of having a smart business model that does make money -- and despite your continued attempts to pretend we say stuff we haven't, we're seeing it work every day. When content creators adopt the models we discuss they almost always DO BETTEr meaning they MAKE MORE MONEY.


                Ad supporting? Mike just has to ask Chris Anderson from Wired how that model works - Wired has lost more than 50% of it's ad income and more than 55% of it's ad pages, according to reports I have seen online. So we face an issue where the model that is mst often suggested as converting that "value" into "money" isn't working out.


                Heh. Chris is the editor, not the publisher. You should learn what the difference is. The problem with Wired is that it hasn't really put Chris' ideas into practice.

                You amuse me to no end with your inability to understand some very basic facts. Consistently we catch you in blatantly false statements and the amusing thing is that you ignore every one.

                When you were here a couple months ago, I suggested that you would be better off taking time to actually learn a little bit about these things before continuing to display your ignorance. When you went away for a month I thought maybe you had taken that suggestion. Apparently not.

                 

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                  identicon
                  Anonymous Coward, May 29th, 2009 @ 7:03pm

                  Re: Re: Re: Re: Re: Re: Re:

                  Oh Mike, please come off it. You want the news to be free. You don't want the news people to charge memberships or subscription fees, or anything else. The only time you cite a newspaper as doing something good is when they offer other services than news to make ends meet (what paper was doing the seminars?).

                  You are long on "do it better and make more money" but I haven't seen you put forward one model for news gathering that would actually make enough money to make it all work.

                  "Chris is the editor, not the publisher. You should learn what the difference is. The problem with Wired is that it hasn't really put Chris' ideas into practice."

                  Chris's name is on the masthead, and example is this month where he pretty much abdicated editorial control and turned the whole thing into an Abram's love fest. Absolutely one of the worst editions of Wired ever, poorly organized, using dense and annoying design and poor color choices, and actually making the magazine less inviting and the advertising less obvious.

                  If Chris isn't satisfied, why not just move on to writing books and stay away? The ad revenue is lost under his watch, Wired has lost more ad revenue than other mags under the same company. I guess he has no responsibility at all.

                  "You amuse me to no end with your inability to understand some very basic facts. Consistently we catch you in blatantly false statements and the amusing thing is that you ignore every one."

                  Nope, what you consistantly catch me at doing is upsetting your apple cart and pointing out the contradictions in your own statements. You are a slippery little eel about many things, and you often slither out with a dismissing "you just don't understand", when I think you often realize that the negative comments on here are often more right than you want to admit.

                  "When you were here a couple months ago, I suggested that you would be better off taking time to actually learn a little bit about these things before continuing to display your ignorance. When you went away for a month I thought maybe you had taken that suggestion. Apparently not."

                  Actually, I learned much in a month or two. I learned example that I am not the only person who thinks you are intentionally vague. It gives you many more outs. Congrats, it's the sign of someone who might one day be a Senator or member of the house.

                   

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      Ima Fish (profile), May 29th, 2009 @ 1:09pm

      Re:

      Value. This is one of those things that Mike has a hard time grasping

      No, Mike understand value perfectly. It's Jon Miller who erroneously equates value with price.

      Under Jon Miller's erroneous definition of "value," Google, broadcast radio or TV, and Skype have no value to us solely because we do not pay for them. That's completely asinine.

      Think of it this way... does my crap have any value to you? Nope. Would it suddenly and magically have value merely because I put a price on it, let's say one dollar? Nope. It would still have no value, even with the price.

      And that's where Jon Miller is wrong. He thinks putting a price on news magically adds value to it. However, "value" does not come from the price tacked onto it, "value" comes from the benefit it gives the user, which is completely irrelevant to the price.

      To put it simply, merely putting a price on news will not add any benefit to the user, so there is no possible way it could add value to the user.

       

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      Anonymous Coward, May 29th, 2009 @ 1:19pm

      Re:

      a thing is only worth as much as someone else is willing to pay for it

       

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      CStrube (profile), May 29th, 2009 @ 1:22pm

      Re:

      a thing is only worth what the purchaser is willing to pay

       

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    :Lobo Santo (profile), May 29th, 2009 @ 12:41pm

    The Goog...

    "He said that ad-supported content doesn't work."

    So... he's never heard of Google?

     

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    Roy, May 29th, 2009 @ 12:55pm

    Not exactly...

    "It's pretty clear that there has to be some recognition of value," said Jon Miller....
    Actually, I think there needs to be some value to be recognized. Value doesn't appear by fiat.

     

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    identicon
    Anonymous Coward, May 29th, 2009 @ 12:55pm

    "noting that cable television service providers learned how to charge for television shows."

    They learned to do so by reducing competition and making lucrative profits. There is no need for them to charge nearly as much as they do, and if they didn't that's proof that charging such huge amounts of money is unnecessary. The problem here is a complete lack of competition. What this person is proposing is that they find a way to make special interest groups unnecessarily increase their profits at the expense of everyone else, just like they did with cable. To them, their profits are more important than the social welfare of society and hence that's what they are focusing on.

    "Web companies will have to figure out a way to charge consumers for content"

    They have to figure out a way to make special interest groups increase their profits with no regard for how this affects social welfare, noting that cable television service has done the same thing. Their profits are more important than social welfare and economic efficiency and its such a tragedy that society can benefit from something without special interest groups doing everything in their power to minimize that social benefit to maximize the benefit to special interest groups. As a result, this needs to be fixed, we need to do everything in our power to minimize social benefit to the benefit of special interest groups. Cable television did it, so it can be done, this tragedy can be fixed.

     

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    identicon
    Anonymous Coward, May 29th, 2009 @ 12:58pm

    "The reason that cable providers learned to charge for television shows was because there was a scarcity there"

    Much of that scarcity is artificial. The problem is a lack of competition. Once you have the fixed costs it doesn't really cost very much more to add more houses to the cable but companies charge that which maximizes their profits, not that which is best for society (of course they lie about their costs and such, claiming it really costs more and claiming that their service is more scarce than it really is). A lack of competition allows for such a thing.

     

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      identicon
      Anonymous Coward, May 29th, 2009 @ 1:17pm

      Re:

      Cable companies could charge because they ADDED value. Before cable the only TV stations you got were those within broadcast range. If you were lucky that was about 5-6 TV stations: NBC, ABC, CBS and some local stations.

      The value cable ADDED was providing you access to the TV stations in your local marker free AND delivering more stations/programming choices to you. People VALUE that service and are therefore willing to pay a PRICE for it.

       

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    Ima Fish (profile), May 29th, 2009 @ 12:59pm

    "he expected to see the rise of Internet micro-payments"

    Waiting for micro-payments (or the perfect DRM that will actually eliminate piracy) is sort of like waiting for the ocean to run out of water while your ship is sinking.

    "Any day now...."

     

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    Anonymous Coward, May 29th, 2009 @ 1:04pm

    "Miller noted that Web companies will have to figure out a way to charge consumers for content they have grown accustomed to getting for free, noting that cable television service providers learned how to charge for television shows."

    What a tragedy, something that maximizes social benefit. We need to fix this, social benefit shouldn't be maximized. When television cable maximized social benefit that tragedy was corrected, so this one can be corrected as well.

     

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    Anonymous Coward, May 29th, 2009 @ 1:06pm

    Why NewsCorp can't give content away

    I think the problem with Jon Miller's logic is that people understand how vile, hateful, virtually all NewsCorp properties have become after the previous election.

    People are voting with their dollars. It started some time ago, but the warning sirens went off for me when The New York Post featured an editorial cartoon involving a dead Chimp. Then there's the firing of Alan Colms, the Steve Doocy guy, Hannity's desire to be Waterboarded for Charity (which he backed down from) OpEds by Karl Rove on Wall Street Journal, O'Riley sending reporters out to follow bloggers on weekend vacation trips, Reporters saying increasing mileage on cars is horrible because it will make them less safe in a car accident... The list goes on.

    These are just what I can name off the top of my head, but collectively have slowly shown a disturbing trend, which only seems to have one common denominator: NewsCorp. Collectively, they seem to show NewsCorp's true colors and why I find it difficult to believe anything associated with the company. Hence, I lack desire to associate myself with, or patronize the company.

    It's no wonder why NewsCorp can't even give their content (read: propaganda) away.

     

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    Anonymous Coward, May 29th, 2009 @ 1:10pm

    This is FANTASTIC news. Thank you Jon Miller for the inside tip that your internet properties are soon to get devalued! I've added Newscorp to my list of stocks to sell short.

     

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    identicon
    Anonymous Coward, May 29th, 2009 @ 1:37pm

    "Digital Boss Says Free Doesn't Work"

    Doesn't work for whom, him, only because it doesn't maximize his profits?

     

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    Tgeigs (profile), May 29th, 2009 @ 1:40pm

    "Digital Boss Says Free Doesn't Work"

    Well, I don't know who this lazy ass Free-guy is, but I would think it's up to the boss to fire him, no?

     

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    al, May 29th, 2009 @ 1:52pm

    cost of goods...

    has any paper EVER made money off of there subscriptions ???
    at most it covered the cost of paper,ink,printing,and distribution.
    the internet of today is the radio of the 21'st century. when is the last time you sent the radio station a payment for your news?? or tv station a payment for the weather.
    learn to live with it...
    make it work for your benifit
    or die....

     

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    Michael, May 29th, 2009 @ 2:04pm

    in general, cable charges for service, not content

    Cable is like your ISP - they provide the service (there are specialty channels, but that's like special subscriptions to certain kinds of websites - your local, national, or international news channel is still "free")...

     

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    Anonymous Coward, May 29th, 2009 @ 2:19pm

    Has Fox News become a "Current Affairs" Network?

    Well, at least Katherine gets it, and it seems Jon "Skippy" Miller doesn't. The above provided link is provided with an ironic overtone.

    Perhaps D7 is actually a group intervention of sorts. Perhaps the desire to have a 24-hour "ACA" or "Today Tonight" needs to be tossed as today's newshound seems to favor a slightly different presentation.

     

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    identicon
    Anonymous Coward, May 29th, 2009 @ 2:19pm

    Has Fox News become a "Current Affairs" Network?

    Well, at least Katherine gets it, and it seems Jon "Skippy" Miller doesn't. The above provided link is provided with an ironic overtone.

    Perhaps D7 is actually a group intervention of sorts. Perhaps the desire to have a 24-hour "ACA" or "Today Tonight" needs to be tossed as today's newshound seems to favor a slightly different presentation.

     

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    Nelson Cruz (profile), May 29th, 2009 @ 3:01pm

    How about recognizing the value of sex

    How about recognizing the value of sex with Jon Miller's logic? There's a girl in Nevada actioning off her virginity for 3+ millions of dollars... while millions of girls give it for free! OMG! That's a lot of wasted value right there!

     

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      Anonymous Coward, May 29th, 2009 @ 3:43pm

      Re: How about recognizing the value of sex

      Well for many, the value of sex is something that belongs to only one. Don't know your values, but...

       

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        identicon
        Anonymous Coward, May 29th, 2009 @ 4:19pm

        Re: Re: How about recognizing the value of sex

        Sorry, didn't mean to cut you short, but Levi Johnston called. What were you saying again?

         

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        nelsoncruz (profile), Jun 8th, 2009 @ 7:58am

        Re: Re: How about recognizing the value of sex

        Anonymous Coward, I hope you realized I was being sarcastic. I was pointing to the fact that you don't need to put price tag on something to "recognize it's value". Price=value is a fallacy.

         

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    identicon
    Anonymous Coward, May 29th, 2009 @ 3:03pm

    The fact is that if consumers hit the same wall for every garden they want to enter, they're just going to eventually pay. It's worked for music, there's no reason it shouldn't work for other content as well.

    They're betting that there's a tipping point where enough content providers are going to want to get paid for content that they'll be able to reach that critical mass of paid vs free content.

    The downside of this bet is that until that critical mass is reached, those inside the wall will suffer. The only alternative is for the various organizations to simply survive long enough for the inevitable consequences of providing free content to clear the playing field. Since the returns from providing free content are probably close enough to the returns of providing no content whatsoever, I'm not sure they see the same sort of downside at this point in walling their content.

     

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      Anonymous Coward, May 29th, 2009 @ 3:32pm

      Re:

      "It's worked for music, there's no reason it shouldn't work for other content as well."

      Because special interest groups do everything in their power (ie: by lobbying the government for new ridiculous laws) to eliminate any competition and social welfare suffers as a result. But who cares about social welfare, the profit margins of special interest groups are more important.

       

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        identicon
        Anonymous Coward, Jun 1st, 2009 @ 1:21pm

        Re: Re:

        "Because special interest groups do everything in their power (ie: by lobbying the government for new ridiculous laws) to eliminate any competition and social welfare suffers as a result. But who cares about social welfare, the profit margins of special interest groups are more important."

        I don't really understand how for-profit companies are necessarily obliged to put social welfare before their own financial well-being.

        In any case, it's inevitable that "if" free content does not provide a reasonable return on investment (and content providers are claiming that this is the case) then any content which requires any substantial overhead will ultimately be paid content of some form or another. This is not a consequence of any single or group decision or necessarily collusion, but just the natural and inevitable consequence of market forces.

        Sure it can be accelerated through overt or covert collusion between the content companies, but even if that does not occur, it will happen anyway just as a consequence of the attrition. When there are few enough content providers still delivering quality free content, there doesn't need to be any collusion between those that want to start offering for-pay services that then offer a significant value because there just won't be any free competition left.

        This does assume that the content producers are actually correct in their claim that for-free content or ad-based content is unsustainable.

         

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    herodotus, May 30th, 2009 @ 12:38am

    Anonymous Coward is boring

    Really.

    And Mike, please, ignore him.

    Early AM radio had static (it still does for that matter). Analog tape had surface noise. Blogs have idiots who make silly 'gotcha' comments and talk about how insightful they are. All of these annoying natural phenomena are best ignored.

    Eventually someone will come along and solve this last problem the way FM radio and digital audio solved the problems of static and surface noise. In the meantime, try to pretend it isn't there.

     

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      identicon
      Anonymous Coward, May 31st, 2009 @ 2:26pm

      Re: Anonymous Coward is boring

      Sort of like ignoring that noise in your car by turning the radio up? Good idea until the car dies in the middle of the road because you failed to pay attention.

       

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  •  
    identicon
    luckybleu, May 30th, 2009 @ 8:02am

    water

    i remember when water was free now I pay a buck a bottle

     

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