The Flip Side of Free


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Analysis of free versus fee content invariably focuses on content that must be paid for by consumers in its original form (such as newspaper and magazine articles) but that is often offered for free at an advertising- and sponsorship-supported Web site. Many pundits believe that if content is offered for free in one medium, it will cannibalize another, and that's all they obsess about. Yet despite all the debate about free and paid content business models, market observers have largely missed the flip side of free content: valuable information that individuals are eager to give away for no charge and that smart companies then aggregate for profit. This model is the opposite of what's being debated and it is a whole lot more interesting.

My seventh-grade daughter and her friends have fun with a site called RateMyTeachers.com. On the site, school children rate their teachers with point scores, add emoticons, and offer comments on teaching ability and style. Ratings are then aggregated and averaged over teachers and schools. The site boasts an amazing eight million individual ratings on over a million teachers. Somewhat surprisingly, the site is also useful for parents to help understand what's going on at school. For example, I kept hearing stories about a certain terrific math teacher. Sure enough, in nearly 80 individual reviews on her, almost all were the highest score. An example comment: "She Rocks. I used to hate math—now I LOVE it!!!" The ratings also provide insight into the other sort of teacher. Now when my daughter says, "Nobody likes him, he's a bad teacher," sure enough, according to RateMyTeachers.com, she's right. RateMyTeachers.com makes money through advertising, but what is most fascinating is that all of the content is happily contributed by students. Here is the flip side of free in action—a smart content company figuring out how to get people to contribute compelling content for free and then building a for-profit business model around it.

Amazon.com has long relied on contributed content for its site. Product information and specifications are provided free by publishers and manufacturers that sell their wares on the site and reviews of books and other products are contributed by consumers. Amazon.com has built a huge content site by having all of the content provided to it for no cost. Of course, Amazon.com makes money by selling products based on the contributed content on the site—another example of the flip side of free.

In the real-time financial markets, companies have built large and successful businesses based on the ability to aggregate and sell freely contributed content. For example, Reuters has long been the leader in providing foreign exchange quotes and Bloomberg fixed income quotes. Traders pay hundreds of dollars per month to get access to these quotes, which are contributed by banks and securities companies who use them to solicit business. In the technology industry, Computing Reviews (a partnership between the Association for Computing Machinery and Reviews.com) sells subscriptions to its computer book and article review service. What makes this business model interesting is that all of the reviews are contributed; all the reviewers get is peer recognition.

Recently, companies have started businesses to aggregate blog and other consumer-generated content and offer paid services based on it. For example, NewsGator Technologies is an RSS aggregation platform that offers software to retrieve and organize feeds for individuals and companies. Subscribers have the ability to customize the delivery and presentation of the feeds. Intelliseek's BrandPulse helps marketers mine and analyze consumer-generated media (the millions of consumer opinions and experiences aired in Internet discussion boards, forums, communities, USENET newsgroups, blogs, and direct company feedback) to help them gain a competitive advantage. BrandPulse uses Intelliseek's text-mining and text-analysis technologies, but the data analyzed is all freely available. Newstex has begun aggregating and adding value to blog content by running it through a taxonomy engine in order to add metadata such as ticker symbols and category codes. Adding these tags makes free content easier to find (and therefore more valuable) and allows Newstex to wholesale the resulting feed to other information distributors.

Other smart companies are also working to add value to freely contributed content: PubSub is a content matching service with alerts that notify subscribers when content of interest has been updated. Technorati indexes and monitors blogs to find out what people are saying about people, companies, products, brand names, politics, and other areas of interest. PubSub and Technorati (and other start-ups) have figured out how to aggregate and add value to free content in new and useful ways. Subscriber numbers are growing quickly. The challenge for these and other companies exploiting the flip side of free is to figure out the right business model to make money from the efforts. With free content as the raw material, costs can stay low while on the flip side profits can skyrocket.