Free Rules


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As a rule, the smaller and skinnier a chili pepper, the hotter it is. However, on the Scoville scale of chili heat, the habanero is that pesky exception that renders the rule almost worthless. While it’s handy to have a way to gauge which chilies to toss into your salsa with abandon, one errant bite of a mid-sized, bulbous habanero could put you off chilies for good. This pepper may not look the part, but it is just a bit cooler than, say, hell.

Exceptions may often prove rules, but what this case proves to me is that if you follow the rules of pepper assessment too strictly, you’ll get burned.

With digital distribution, the rules are still emerging and, like publishing business models, will continue to do so. Some things remain almost constant, though, such as the free versus fee debate. From B2B magazine and daily paper models to newsstand sales and high-value subscription content, the publishing business has always demanded a range of formulas for feeding the bottom line.

Periodically, the debate rears its head in the mainstream press—particularly when it is major publishers vacillating on the subject. To wit: NYTimes.com’s "Now its free, now it isn’t, yes it is again" approach; FT.com’s "It costs except when we give it away to Facebook subscribers to get ’em hooked" tactic; or Elsevier’s "High-value content will always bear a hefty price tag except that maybe we can make more money with an ad-supported STM portal strategy, so let’s give it a shot" strategy.

While all or nothing may sound like a much clearer value proposition, the market has been neither hot nor cold on either extreme—at least in terms of supporting the bottom line. Ultimately, no matter how much demand there may be for no-cost content, somebody’s got to pay to make it pay to create the stuff in the first place. Unfortunately, advertisers also run hot and cold, making a mixed model the safest so far.

Stop the presses, though, because Wired editor-in-chief Chris Anderson has seen the writing on the price tag, and it says "Free." Well-known in EContent circles for his last book, The Long Tail: Why the Future of Business Is Selling Less of More, Anderson recently published an excerpt in Wired of his forthcoming Hyperion title Free! Why $0.00 Is the Future of Business.

While the concept of the content long tail has taken on near mythic status in our industry, I think it is important that everyone read the subheads for the two books. Anderson has changed his tune a bit (or changed with the times). Only 3 years ago, we could still sell; now we’ve got to give it away. Like the ebb and flow of the publishing business, Anderson’s theories demonstrate the value of both.

When I asked him about where the long tail of content sits on the free/fee continuum—if the willingness to pay increases further out toward the tail’s tip—he replied, "In general people become more price-insensitive the more relevant things get to their specific interests. That means, as you suggest, that in many markets the head of the curve is free and the tail paid. Think ‘freemium’—only the few power users pay—or music—only the biggest fans pay, for the concert version."

Interesting that he chose music as one of his examples—CD sales are no longer viewed as a reliable revenue stream due to the ease of digital piracy, and musicians have begun to view digital distribution of songs as a loss-leader; better to give the music away online and make up the money in concert sales. Yet the flip side would be satellite radio, in which consumers pay for something they’ve always had for free in order to listen to almost-commercial-free content that appeals to niche tastes.

While Free will sell books—and from the examples Anderson proffers, it supports everything from razor sales to cell phones and air travel—generating revenue by giving it away will likely remain as unreliable a rule as ever. We have seen it in B2B publishing, with magazine pages dwindling across the industry and periodicals disappearing altogether or trying out web-only distribution. Where advertisers once gladly foot the bill to get to qualified readers, they can now reach them more directly online.

With Anderson backing it, I have no doubt that Free will be hot, both as a book and as a business strategy. Yet while I’d love to unequivocally endorse the exceptional rule that free is the future of business, it looks to me like the content business will continue to follow its own mutable laws.