You have to admire Conde Nast - launching new magazines in the midst of a recession. So far I've been impressed with the UK version of Wired magazine launched a few months back. The August edition carried two almost contradictory features.

One was an extract from Chris
Anderson's much lauded recent book Free: The Future of a Radical Price

"The web has become the biggest store in history and everything is 100 per cent off." According to the reviews Anderson suggests that we've arrived at a new paradigm. Old models of price and value are being overturned.

Anderson is not saying everything will be free... more that we will value things in different ways. Whilst some things will be given
away, entrepreneurs will find new business models to make money in other ways. So a new band will give its music away for free as it will get pirated anyway. It will charge people to get a limited edition CD case, for tickets to a concert (which they will be keener to see having heard the music
already), a T-shirt etc. 

A few pages earlier in the magazine, a feature about Rupert Murdoch's plans to start charging for content online. Follow the link to read the full story but to summarise;

Evaporating print advertising means income in the newspaper segment of Murdoch's Newscorp empire has plummeted. Obviously Murdoch isn't happy about the way all that 'free' content on-line makes it necessary for him to make his on-line offerings free too. But guess what. Murdoch sees readers taking up the slack by subscribing. No clever new business models... just old school subscriptions. Why? Well, Murdoch's Wall Street Journal (WSJ) has been quietly charging customers for access to some content since 1996. And:

- WSJ has around 90 per cent of the traffic it had before it started charging
"You don’t lose traffic when you charge, if you continue a rigorous effort to let people sample, let some content be free on any given day. You can keep up the same traffic, but your core readers – 10 per cent – will buy it so they never hit a paywall. So it’s not like you flip a switch and either you have [digital] ad revenue or circulation. WSJ has both."

- The cost of getting a print subscriber has gone down
"If you’re giving something away [online], it’s harder to get people to buy the print version. But if you attach a value to the online version then it’s easier to sell the print version and, most importantly, it’s much easier to sell the print version if you bundle the print subscription with an online subscription, which is what the WSJ and FT do."

So... will the on-line future be 'free'? I hope not.

Twitter and Facebook have yet to make any real money. And there are few examples of revolutionary methods of making money on-line. For most of the 'free' gang it's...  advertising... which isn't providing anywhere near enough income to run solid businesses. Yep. I'm on Murdoch's side. I don't believe all the smoke and mirrors.
Ultimately a business has to make money and I think age old business principles will still apply. I'm tired of the hidden
catches, the headline rates and amazing FREE deals that are
meaningless when you read the small print.

Indeed, its obession with 'FREE' means the internet encourages sleight of hand.

I HATE 'free'.

As consumers we need to wake up and realise that 'free' is rarely best. 'Free' usually means:

- You'll get hit for a charge somewhere else along the line
- You'll find the product isn't that great. If someone is giving something away for free, surely that means they can't convince anyone to pay for it?
- You won't appreciate it. Price defines something's worth in surprisingly subtle ways.

Maybe it's a bit generational. There's lots of talk of the current generation of students and schoolkids expecting stuff to be free. As if there's a quantum shift going on. But I'm not sure. (Maybe it's because at that age you have limited cash but plenty of time. So you can sift through the bum stuff and find the genuinely good stuff. As we get older we have more money but far less time. So we are prepared to pay for stuff to save time.)

Personally I don't want something 'free' with a hidden catch or that doesn't work all that well. I'd rather pay a nominal amount to use Twitter, Facebook, Hotmail, Gtalk and the rest and be sure it will work... all the time. Then I won't have to put up with stupid ads which get in the way and slow down the load times of pages. And if something goes wrong, someone will actually be motivated to fix it.

Wouldn't you?

15 thoughts on “Free? No thanks… I’d rather pay

  1. You can charge for publications like the FT and WSJ because they have a large but niche audience that's willing to pay for what's being served up, in this specific case business and financial information. What niche does a paper like The Times target? Well it doesn't as far as I can tell, it reports the news, the same news most of the rest of the papers report + tv news but with a particular political bias, the same goes for all the other dailies. But I can't see that there is an audience that is willing to pay for that on the internet, why? Because the internet taught us we don't have to pay for what we don't want and don't value, why should I pay 40p (I have never bought a paper in my life so I've no idea how much one costs) for a paper that's half full of stuff I won't read, sports secton? not interested, fashion? don't care, celebrity gossip? not even a little bit. I won't pay for that and on the internet I don't have too.

    Even more than that, I can't buy anything on the internet for 40p, no one can price anything at 40p because everything has to go through a credit card, the internet is begging for some kind of micropayments system that works and for the life of me I can't quite figure out why no one has done it yet.

    So no, people won't pay for general purpose news, they will pay and will increasingly pay for news or opinion that conforms to certain niches. What we need now as I said is some kind of micropayments system that means you can price good content at *a price* even if it's not much, say 1 pence or 2 pence. If it's so little that people automatically pay it but is actually not free.

  2. I'd bet on the advent of a micro-payments model of some kind or another. We'll look back to see the real revolution being unprecedented co-operation between media owners to facilitate its establishment.

  3. Hello both... yep. I agree totally. It will all be about micropayments.
    @Rob... I think you already can make payments for small amounts - using Paypal I don't think there's a minimum payment. And iTunes of course allows you to buy a single tune for about 87p or something.

    Bring on the option to PAY and avoid the junk you have to put up with for the 'free' service... that's what I say.
    Incidentally I happily pay for a Saturday copy of the Times (£1.90) and really enjoy the luxury of reading it. I could read virtually all that content online for free, but choose willingly not to.

  4. Jeremy, I could be wrong, it could have changed recently but I thought that while paypal don't enforce a minimum they do charge the receiving person or business a *flat fee* plus a percentage, I think that might be about 40p + 2.5% or some such, in that ballpark anyway.

    But the biggest problem I think is that paying for things online is such a pain in the ass. Half the time I might think to myself do I want to pay 40p? Maybe, do I want to pay 40p and log into paypal blah blah blah, probably not.

    Apple have solved this pretty much with itunes what we need is someone to do it in a simple and straightforward manner for online content. I had heard that a micropayment system across publishers had been mooted, I do hope they do this, paypal could do with the competition.

  5. It's getting a little creepy how I keep agreeing with you, Jeremy. Free is never free: free means suffering more advertising, or mediocre quality, or having to pay in some other way (usually time, which is in increasingly short supply in my life!)

    I am already paying £142.50/year for my BBC content (absolutely delighted: what a bargain), plus about the same again for my Sky package (hmm; just about scrapes value, but only just), plus about the same again on newspapers (incredibly good value), plus a bit less on magazine subscriptions. Would I pay more if I could eliminate advertising from my internet experience? Yes I would. Or would I pay a lesser amount if I could guarantee that all ads appearing on MY screen were static, animation- and video-free? Yes I would. (Advertisers please note: create an ad that flashes, bounces, jumps, moves, flickers or incorporates streaming video and you just lost my potential custom.)

    I agree with the above: micropayments are an obvious way forward, but then again, if all newspapers went to a micropayment model, where it cost say 5p to read an article, I probably wouldn't click: that 'pay-as-you-go' concept is a real disincentive (unless it's to read a specific columnist, or a specific subject). Charge me £10 a month for full access and I'd sign up tomorrow.

    It's simple: stuff costs - because it's created by people who need to buy food to live. The internet has caused a massive disconnect in people's minds between cause and effect, creator and product. I don't want to live in a world where the only people creating are those who don't have mortgages to pay or families to support.

  6. Rob... For some reason there's no hyperlink attached to your name on your comments... I've had problems with this in the past... Should there be one? My comment and Matthew's the hyperlink seems to work OK so I'm not sure... could you advise!

  7. I guess giving something on time-limited free can be used more for eliciting attention and reviews of a product or service. Giving something away for free doesn't usually get positive response as people try to validate as well if the product or service is even worth th attention.

  8. I suspect the future for subscription-based models is bundling. For example, Murdoch could bundle Sky TV with access to the Times, Sunday Times, Sun and News of the World, along with phone calls and internet access. Other features could be added such as access to smaller online magazines, perhaps, and members clubs such as the Sunday Times Culture+. Then the incremental cost of paying to read newspapers online could be quite small, and opaque to the individual consumer.

    Micropayments could also work, potentially, but I don't think 5p per article would be realistic. The cost of clicking on an article would have to be way lower, perhaps 1p. This might even result in greater total revenue and would be of more interest to advertisers.

  9. Jeremy,
    near the end of the free book is a chapter that goes through each anti free argument (many of which mentioned above) and takes them apart quite convincingly (or explains where they need caveats)

    e.g take wikipedia, free yes (at point of use) but paid for by Google, Sun etc.... by tiny tiny payments that consumers of Sun and Google pay over and above what they would have paid if Google / Sun etc were not paying for wikipedia (via donations). Hence, as that price the increased cost is so marginal (to the Google / Sun consumers) that it makes everyone believe you are getting something for nothing, which is not the case

    Incidentally you don't have to pay for the book on free, I got it for free (epub version) and read it on my iphone..... what a weird wired world we live in!

  10. @ Alex... yep. I really ought to read the book! Is it still available for free? If so please feel err, 'free' to provide the link... (I think the 'free' deal has now expired? I couldn't find it.)

  11. Hi Jeremy,

    Interesting stuff although perhaps a little harsh on the 'free gang'.

    Marc Andreessen thinks Facebook will generate in excess of $500 million this year. Twitter appears to be morphing into a real time search engine (new home page) and remember the mighty Google had no rev model until it stumbled across PPC.

    In addition, I'm not so sure advertising is the answer for most of the 'free gang'. Some go for a freemium model (I was told on its sale to Disney, Club Penguin was turning $60m on profits of $30m) and others highly succssful lead generation models (MoneySupermarlet, Kelkoo and most comparison tech).

    Also, is free really new? ITV offer what some judge to be excellent content for free with ads being the 'sleight of hand'. Shopping malls offer all those lovely shops for free etc if all those lovely shops are of interest to you.

    Technology has offered the potential to disrupt the old ways of doing things, ie old media. To take audience form old media, the entreprenuers and their backers offered content for free to build audience. As you say, there still has to be the exchange of money at some point which seems fair enough.

    These are exceptional times and perhaps the elevation (not creation) of free should be seen more as a tactic people deploy to disrupt established businesses and then to make money?

  12. Some outlets have been charging for certain premium content. I'm not sure how well that model works but the New York Times Company, for example, has been cited more than once as being one of the most "new media" savvy publishers. A few years ago, they tried charging for content or online subscriptions and seemed to have abandoned that idea. But they do charge a relatively small fee for the full text of archive articles older than a certain date and other special features. I pay, for example, $29 a year for their games page because I am addicted to their crossword puzzles and double crostics.

    In another wrinkle to the issue of people expecting free stuff - the whole trend is not just confined to online content. In the travel market, I am noticing that all my outlets are looking for pieces on free things to do in various destinations.

    I suppose that in these parlous times, people who have already paid for long distance transportation, perhaps a rental car or rail fares, accommodations and meals, are having second thoughts about other costs. Perhaps holiday-makers in 2009 are thinking that destinations should be ravishing/fun/serene/exciting/whatever enough on their own to make all that travel worth the effort and expense.

  13. I think you already know my views on this ( I wrote about it a while back http://bit.ly/zdykH ).

    Essentially I agree with Matthew Teller. I'd like to pay a £10 monthly subscription, but not direct to Mr Murdoch for access to just his newspapers. Instead to a wholesaler like Amazon for a basket of newspaper/magazine titles that matches my interests. Eg 'The UK Broadsheets' subscription package which sells for £10.50 pm from Amazon or 'Broadsheets Plus' (which includes the Sundays) for £14.99 from Waterstones.

Comments are closed.