Long Live Free: How Free Makes Money

    October 9, 2007
    WebProNews Staff

The concept of "free" isn’t exactly a new one, but it is taking on a sort of new life in the digital age as major publishers (slowly) warm up to the concept – except the recording industry, of course, where the "free" is usually coupled with "to help make us a lot more money."

Long Live Free: How Free Makes Money
Long Live Free: How Free Makes Money

The RIAA doesn’t have a lot of friends these days, even from the traditional bandwagon – Radiohead and Trent Reznor are the latest to abandon their labels to foster better relationships with their audiences.

While the recording industry is busy filing lawsuits, it has ignored the relationship aspect of selling – it’s often a good idea to have your target market like you – and acts as though production costs aren’t significantly lower in the digital media age. Downloads cut out the costs of manufacturing, distribution, and, thanks to the socially viral element of the Web, even advertising.

Hence the reason Apple’s Steve Jobs has repeatedly told them to shove it when they’ve wanted to raise iTunes download prices by a factor of three. The low overhead of online business is what has led to some analysts placing 100 times revenue values on certain well-read blogs.

Major newspapers are learning this valuable lesson, too. Publishing 2.0 eliminates much of the cost associated with printing, which is (presumably) the reason to charge for content in the first place, generated advertising revenue notwithstanding. The New York Times is one of the latest to remove the monetary barriers to its online content.

You’ll have to register instead, though, to give the advertisers the demographic information they crave – even if there have been entire (if unsuccessful) petitions in the past to drop those registration pages. London-based Financial Times was less generous, allowing 30 free pageviews a month with registration.

Two Laws of Online Content

1.    People don’t want to pay for it.
2.    People don’t want to tell you their life story to get it, either.

That’s because Internet users, like humans as biological beings, are inherently selfish and lazy. That’s not a swipe at humanity, just the reality. People want their content free with a certain immediacy – damn the advertisers.

The NYT was making about $10 million in subscription fees, but has gone the registration route instead, believing they can surpass that number with advertising revenue – basically the broadcast radio and television model that has worked for the better part of half a century.

So we know that "free," as a business model, works to generate revenue – if not, then all those PR flacks out there are wasting company time and money handing out schwag-bags at conferences and public events.

The Law of Gimme-Gimme

People will take anything as long as it’s free, whether or not they need it or want it*.

The latest speculation is that News Corp. mogul Rupert Murdoch is looking to loose the content bonds on the Wall Street Journal. Some think he’s a fool if he does, arguing that quality content demands payment. But two things we do know: Murdoch has made a lucrative career by not being stupid; and see the First Law of Online Content above.

What Small Businesses/Publishers Learn From the Big Guys

1.    People visit content if the cost of doing so is low (registering) or nil in terms of time, money, and/or effort.
2.    Freeing your content, bringing it out from behind walls helps ensure more search engine traffic and pageviews                 (which is, of course, salable to advertisers).
3.    A happy visitor is a return visitor.
4.    You can sell two products at the same time: pageviews to related advertisers; your own, unique product related to             the content on the screen.

The Conundrum

Depending on what you’re selling online, the "free" business model may not make sense to you. It’s easy for publishers with no printing costs to say advertising and search will get you to the next level, but what if, like the RIAA will argue, you have a tangible product? Free won’t cut it.

Again, this depends on that which you’ve based your business. Radiohead has a new CD and it can be obtained for free. It’s more of a donation model, but they have larger packages for sale that includes artwork, lyrics, and even vinyl records. They’re banking on the up-sell, as well as concert ticket sales.

But you can also use free content as a promotional vehicle, so long as it’s not obvious search spam that will get you penalized or dropped from search results altogether.

Blender company Blendtec is probably the best at utilizing the new media to generate sales. The "Will It Blend?" series on YouTube and Blendtec’s homepage is a creative way to do entertaining product demonstrations.

Or maybe you sell vacuum cleaners and parts. You can build a content structure around that without giving away your product, of course. People are always looking for cleaning tips, or maybe they don’t know how to repair a snapped belt. You can be their source for that while avoiding being labeled as spam, and promoting your product at the same time.

Whatever you’re doing online, it will require certain things. Be creative, be open, be necessary, be useful. But above all, be free.  


*This law does not apply to content, but to more physical products — nobody likes spam or splogs.