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Home » Featured, Publishing and Business

Straight Talk on the Price of Free Content

Submitted by Chris on Friday, 06/20/089 Comments

Much has been written about the power of free content.  The publishing industry is struggling with the balance between free content (or entire books for free) for advertising and promotion and lost sales.  Experiments have had mixed results, and sometimes you are left with that nagging thought, “what if we had not given it away for free?”

The new “economy of free” continues to push content creators of all types to providing free goods and services, and web 2.0 companies are challenged in trying to figue out how to not just live on VC money and actually turn a profit.

Matt Maroon thinks that the free economy will eat itself, and has posted a very insightful post entitled Bubble 2.0 that deserves a read.  Specifically, Matt is talking about software and related web 2.0 companies, but regardless of what you are selling (or giving away for free) I think Matt’s alternative view deserves consideration as well.

I think that at the end of the day, much of our new free culture is going to turn out to be just plain unsustainable. I’m predicting that we’re going to see a large number of high-flying startups crash, just like we did before. They aren’t currently flying as high or as conspicuously as last time, so the crashes will be much more graceful, but crash they will. This time they won’t depress the public markets, at least not directly, just hedge funds and private equity.

I have my own opinion, and think free definitely has a place in the business model, but I want to know what you think.  Can companies turn a profit on “free?”

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9 Comments »

  • Jonathan Fields said:

    Moving the free-line has it’s place in a revenue model, but it’s primarily a reciprocity play and it only works as a business model if what you give away is very high value, it’s meticulously integrated into a broader sales funnel and you have a monetized back-end.

    Does that mean you shouldn’t give stuff away? No, bloggers give away value all day long, but if your sole purpose in providing something free is to eventually inspire a sale, the process and underlying psychology need to take that into account and a process needs to be developed around it.

  • Book Calendar said:

    My favorite example of this is the Baen Free Library which is a complete library of free science fiction books available on the internet.

    They often give away the first book in a series available online and you have to buy the rest. This seems to be an effective ploy. Especially if the series is very long 4-10 books.

    Cory Doctorow says he gave away his books to riches by giving away a lot of material online free and then selling it in print.

  • bowerbird said:

    your vision is clouded by your need to make a profit.

    whether or not a “free” strategy helps you in that goal
    is more or less immaterial, in the long run.

    the fact of the matter is that many people who have
    created books — bloggers, new writers, people who
    “merely” have an interesting story they want to tell,
    the mid-list authors you’ve abandoned, and on and on -
    will give their e-books away for free, in the millions,
    to fans who will then kick back money for the best of it
    (as each fan comes to define their own value proposition).

    given this glut of free material, none of you corporations
    will be able to sell your goods into the “market”, so your
    _profits_ will dry up, and you’ll go sell something else.

    all of this is inevitable. everything you do in the interim
    is just mere arranging of the deck chairs on your titanic…

    you can yell at me if it helps you blow off steam, but
    i’m not responsible for it either. it is _inevitable_.

    -bowerbird

  • Meg said:

    I completely agree with the comment about funnel creation. I think if you’re providing valuable free content that drives need and building on a brand that people engage with, you can pull them from the free space into the paid.

    But if what you provide isn’t unique, is easy to find free elsewhere, and lacks driving elements, you’ll find yourself with low conversion rates.

    Sample the best wines, but don’t fill the glass. Then let people know they’re serving it over there on that sunny patio for a reasonable price.

    If the wine is good enough, and the patio is appealing, they’ll sit down to pay for what they tried.

  • Meg said:

    And wow, my grammar.

  • Tushin said:

    Seems that free content is more of an added benefit to users and, at least in the areas I deal, cannot be relied upon for more than that. They provide a resource from which to draw and definitely allow for cross-marketing opportunities, but to believe free will supplant the bread and butter of the sites, sales and/or leads, is a dream in my mind. Get people to your site and then know what to do with them. Free content is just another method to get them to your site.

  • Chris (author) said:

    Thanks to everyone for the comments here. All good stuff, and holy cow Meg Fowler too?

    :)

  • Dax said:

    Free can be used to grow sales as long as the free item is looked at from the publisher or author’s perspective as a marketing piece. How to buy the non-free format needs to accompany the electronic piece but not as an ad. It must be informally presented. Although people who would have bought the physical item now may not, the availability of the free excellent item is passed around to more people and thereby growing exposure. This subsequently grows the smaller percentage of people desiring the physical piece in their hands-who wouldn’t have heard about the book in the first place.

    How much you give away for free depends on how much a person needs to experience to consider it excellent and valuable. The item you want to sell must have a greater intrinsic value than that you are giving away for free.

    The disadvantage will be if this “free” practice becomes a standard. Right now, most publishers/authors are scared. It will be easier to get recognized when the general customer’s eyes aren’t competing with related books. The best books to experiment with are the ones with low cost. The rest is in just the presentation and messaging around it.

    In looking forward, I think there actually may be a day when we are giving away free and cheap physical books or product to promote the digital piece (whether that’s for a hand held or online). Although, there will always be a physical book, evetually the electronic piece will have more value than the physical book (generally speaking).

  • david valade said:

    Agreeing with Jonathon’s and Meg’s comment—free even advocated by Chris Anderson is really only an advanced cross-subsidy. Media sponsored content is really what he and the likes of Fred Wilson advocate.

    Their belief is: Compelling content and tools will aggregate customers—both advertisers and consumers alike.

    This role is not new to many publishers. Instead of viewing it as free content, publishers could identify and implement appropriate measurement systems to unlock the inherent value of aggregation.

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