Will Content Always Be Free?
By Barry Parr
Editor in chief, Amit Asaravala, will return next month. Barry is an Internet media consultant and the former director of
e-commerce research at IDC. He was also co-creator of News.com and a key developer of the first online newspaper at the San Jose Mercury News.
It's surprising how many executives don't understand the economics of their own businesses. Earlier this year, the publisher of a large, successful magazine told me he can't wait to ýcharge for information the way God intendedý now that giving away content in exchange for advertising dollars has failed.
There are so many reasons why publishers who think this are wrong. First, most forms of media are already given away quite successfully. Second, the economics of Web publishing determine that there's more money to be made by giving away content than by selling it. And finally, research shows that disruptive technologies require us to rethink our own cost structures, not our customers'.
Note that virtually all radio and television content is free for consumers. In a recent Slate column, editor Michael Kinsley demonstrated how newspapers are already being sold at the cost of the newsprint. The costs of researching, writing, editing, and printing the news, (plus the 20 percent or so profit margin) are borne by advertisers.
For magazines like this one, giving away free subscriptions to qualified readers results in higher revenues than paid subscription models. This is because they can charge advertisers more for access to the magazine's targeted audience. Even magazines that charge for subscriptions often sell them at a loss with respect to marketing and printing costs.
