Free Milk and the Price of Beef

When I was a bartender back in my college days, I often marveled at what people were willing to do to get a free t-shirt. OK, it went beyond marveling: Sometimes the bouncers and I would really push it, trying to find a point at which the crowd would cry out, "No, we will not do a chicken dance while singing ‘The Tide Is High’ just to get that Jägermeister t-shirt." The thing is, there was almost always someone willing. That they’d do crazy stuff—given the right combination of social lubricants and a crowd-induced feeding frenzy—isn’t all that shocking, particularly given the youthful exuberance of the target market. What actually surprised me was that these patrons would then proudly wear these garments into the bar on subsequent occasions, providing primo advertising space for many a liquor brand. Certain of my more nubile clientele would modify these shirts in such a fetching way—snipping, cinching, etc.—that their appearance at the club could cause a rush on particular beverages. I could almost hear the thoughts of certain customers, untroubled by eye contact: "Mmm. That shirt is making me … thirsty."

Another of the profound insights bartending gave me into human nature is that, wait for it: People like free drinks. I know, crazy, huh? As a bartender, I used what is known as the buyback philosophy. If a customer bought three drinks and gave me a tip every time, he or she would get the fourth drink "on me." I know that not every bar I worked for considered this kosher, but I’m optimistic that the volume of sales I generated more than made up for it. I’m also hopeful that the statute of limitations is up.

Once I moved on from bartending into a career as a journalist, I (like most budding writers in New York) required a second job to stay just above the poverty line. I was a Tanqueray girl. (No, not a Cuervo girl; they had way different outfits.) Tanqueray had developed a festive marketing strategy in which "Mr. Jenkins" would host a free cocktail hour at different bars around the boroughs, and we Tanqueray girls would discretely hand out drink tickets—for Tanqueray cocktails of course. The idea was that if this new generation got a taste of premium gin, they’d leave keg beer behind for good. I still like gin martinis to this day. Go figure.

So what does all this have to do with the price of content online? I’m trying to point out that giving a free taste to get users hooked is so not a new idea. At the same time, opening up the taps and letting unlimited content flow for free devalues it to the level of a beer bong. Unfortunately, moderation requires maturity: It requires a mature content model that knows the value of its process and product but isn’t afraid to live a little and buy a round for the bar once in a while.

I am truly stunned that Chris Anderson’s ideas are still big news. In February, he had an article in The Wall Street Journal, "The Economics of Giving It Away," which made the shocking assertion that, "In a battered economy, free goods and services online are more attractive than ever." Ya think? I was a bartender in the go-go ’80s, and folks liked free then. Yet I can almost hear fee-based content providers thinking, "Why would they buy the cow if you give the milk away for free?" Well, consider, perhaps, that your value might be greater than a transient sip—that you might have a lot more to offer than even a steady stream of milk. In fact, you might need to diversify into cheese, or maybe cowhides and beef, to fully demonstrate the value of your assets.

I do see companies that get it, though. Take Alacra, Inc., which recently launched a free content offering, Alacra Pulse. Mind you, Alacra is not in the business of free content. This company does not have a business model built on banner ads; it assembles vetted, quality content of high value for customers in areas such as investment and commercial banking, management consulting, and law. Despite the fact that it comprises "free" web content, the company has invested a large amount of resources in assembling Pulse. The Pulse Platform is built on Alacra’s proprietary applied knowledge extraction technology, and, in order to maintain the company’s content quality standards, the 2,000-plus mainstream and alternative RSS feeds being scanned were hand selected.

Not surprisingly, Alacra will offer a professional version and provide a free version as a sample to make the upsell. However, the company wisely chose to offset the cost of the free version with advertising, and it will use it as a way to make a targeted offer of Alacra’s related premium content.

Content creators: Fear not "freemium." In order to entice new users to develop a palate for the good stuff, you need to give them a taste for it.