Free Does Not Mean Valueless

Tl;dr People are unwilling to pay for baseline content; make your baseline content free and use it as a loss-leader to sell naturally scarce premium services crafted to engage your target audience.

A coworker forwarded me this article today, entitled "The Emperor has no Content."

It is a short read, and worth reading. Let me say that I am taking this opportunity, as prompted by Mr. Rutledge, to in fact, comment on my own site.

I disagree pretty emphatically with the conclusion that Rutledge seems to make, which is this:
If the content is valuable people should pay to read it.
This is a very common misconception. First off, it utterly conflates 'value' with 'money.' Many things that have value have non-monetary value. Second, it assumes that if something does not have a pricetag, it is worthless. This is also obviously incorrect.

More importantly, however, it misses the point: while I fully agree that advertisers probably do not have the interests of content producers at heart, and that online ads can be really intrusive and weaken online content user experience, I think that simply saying that you should charge for access is the exact wrong attitude. People are unwilling to pay for baseline content, and that is not going to change. What you can charge for is for additional services or goods on top of the free content, as a freemium model. People have no problem paying for things that are genuinely scarce, and online content is not scarce. If you charge me for access to news, I will simply read my news at a free source. There is a stronger argument for charging for access to creative material, as good stories are non-fungible. However, I sincerely cannot remember the last time I actually bought a book from an author who I had not previously read, and liked, and was given that original book by a friend.

It is interesting to note that intellectual property law actually gets this one right: You cannot own news items, nor can you own facts. That is outside the scope of copyright, as it should be. As a result, anyone who is arguing that newspapers should have paywalls is really headed down the wrong avenue: news is fungible. No matter what you are reporting, I can find out about it somewhere else for free. So charging for it just limits your audience.

However, if the NYTimes wanted to charge me for access to message boards that story authors actively contribute to, for the ability to ask questions directly of columnists, for the ability to upvote or downvote proposed story topics -- yes, I would pay for these things. Because they offer me some real value above and beyond merely charging me for something that has literally zero marginal cost to distribute.

Also, please note that Mr. Rutledge's car analogy totally, totally misses the point on this whole debate: Cars are a naturally scarce resource. Each one costs money to manufacture and uses physical material. Online news is not a scarce resource. Once you have written down a news story, it costs no more to send it to five people than to five hundred million. So this is the point that Mr. Rutledge has missed: rather than charging for access to something that is not naturally scarce, Mr. Rutledge should be focusing his energy on providing naturally scarce services or goods to his customers/clients which can then be charged for†. It's that simple. Mike Masnick, of Techdirt, has written literally dozens of articles on this exact topic. I'll link a few choicer ones here. Suffice it to say, I think that despite the fact Mr. Rutledge has very astutely come to some deep, and correct, conclusions about advertising, his underlying point is really misguided.

An Economic Explanation For Why DRM Cannot Open Up New Business Model Opportunities
Saying You Can't Compete With Free Is Saying You Can't Compete Period
In Which I Debate A Media Mogul Who Insists It's Crazy To Give Content Away For Free
Evidence Shows You Can, In Fact, 'Compete' With 'Free'
Economist: Copyright Is An Antiquated Relic That Has No Place In The Digital Age

So, basically, in conclusion, the attitude that things that do not cost money have no value is pretty vexing to me, not only because it is wrongheaded, but because it is so depressingly common amongst content producers, and it is an attitude that leads directly to shooting yourself in the foot. Because instead of figuring freemium services to offer that people would actually be willing to pay for, it is thumping on your pre-existing product and yelling at your consumers for not wanting to pay for it. So instead of being forward thinking and productive, one becomes interested in restricting access to pre-existing work. That, to me, is absurd.

† There are examples of people willing to pay high premiums for infinite goods. HBO is a prime example. So is a subscription to World of Warcraft. However, there is still natural scarcity in both these models: HBO's shows are really, really good and WoW is also really, really good (so I've heard). They are way better than the quality of many of their competitors, and I'm willing to pay for that. However, you will never get a similar disparity in news reporting. This doesn't mean that you cannot charge for premium access to elite content production of one form or another, but, again, it is really, really rare that you can successfully charge for pure content access. Additionally, WoW is not even really an infinite resource, because you are actively leasing server time and directly interacting with other people, who are themselves expending energy in their participation. Finally, ad-supported models can and do work. I'm perfectly willing to sit through Ads on Hulu to get my daily Colbert fix, and as Hulu grows, some of the ads are actually relevant to me.


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