How is Content for Free Defined?

Tuesday, January 5th, 2010

Throughout the year there has been much talk surrounding media, specifically newspapers (but also television, see Time Warner v News Corp), about how they won’t be giving “free” content anymore, or that the “free” access is killing them. But what are they talking about, and how are they defining “free”?

I suppose the convention is that “free” means that the reader/viewer of content does not pay a price up front to experience the content. The issue here is that the logic doesn’t follow that this means that a) the producer loses a sale of a price of admission, or b) that the producer loses money. In fact, where there is a large concentration of readers/viewers the “free” model is at its best – see US network television over the last 50 years. But as we know, this audience size is getting steadily smaller, and funneling ever so slowly into tighter niches (e.g. the Golf Channel).

Again, I think you saw the music industry struggle with this. Because I download a Metallica song for free, did not mean I was going to buy the album for $15, and in those pre-iTunes Napster days, it may have meant that I was actually just trying to sample some songs from my dorm before buying it on Amazon (I mean really, does a 30 second sample do anything?). And of course there is the argument that the increased exposure gained by offering the recordings free has proven in some cases to generate more money in other areas – like touring (a great example is the band Radiohead, which released an album at name your price).

Indeed the publishing industry is not the music business. But, I do believe that when we consider what “free” is we need to be careful. Free for whom? If a publisher puts ads next to content, that isn’t free content because the publisher is harvesting my eyes for revenue, so you’re welcome. So, Rupert, the Wall Street Journal, because it is free in some areas, gains more readers, which means your impressions are higher, and you could charge more for advertising to the larger audience. So the question then becomes, if I charge and reduce the visitors and impressions, can I increase revenue of the lost impression value through subscription revenue? Probably not, yet, I think what becomes interesting is that by creating this Wall Street Journal paid subscriber class, you can basically create a club. This club has a higher value than those that would view free content, why?

It comes down to what the real value of online publications should be – repeat visitors and average engagement in the medium of that class. Total viewers is still interesting, but as an advertiser I want to reach a specific demographic consistently, I’m going to want highly engaged classes that have a higher likelihood of seeing my ad more. Further, proving this to an advertiser online is very easy, the Wall Street Journal using web analytics can effectively be over the shoulder of different classes of readers (based on subscription/non-subscriber, male/female, etc.)

Because of this notion of identifying deeper engagement through demographic and “readership class”, what follows may be obvious. The key shift needs to become that a publisher or a producer no longer needs a large audience to generate value to an advertiser. In fact, often a concentrated and specific audience is more valuable as the advertiser’s message is not only directed with precision and accuracy, but also in these cases of specific match of advertisement and content, ads begin to lose that “interrupt” vibe, and can, dare we say it – begin to be truly informative.

It’s no longer about finding the mass of eyes, it’s about finding critical mass of the right eyes – and having the tools to do it. The publishers and agencies that understand and execute this first will win the century. When simple performance based / lead generation models can proliferate (as you see in the pay-per-click of AdWords, or the pay-per-lead model of a site like Trip Advisor) you start to see an incredible amount of opportunity for the entire publishing industry.

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