Free Is a Four-Letter Word
Walter Isaacson is generating lots of mostly scornful comments for his cover story in Time about How to Save Your Newspaper. For a good synopsis of his idea for saving papers and the scorn about it, see this BNET post, The Problems with Walter Isaacsons's Newspaper Rescue Plan.
Everybody, including BNET, boils it down to one word: micropayments. In fact, it's really about a different word: free. As in, for the last decade, as the Web-based business model grew, so did the idea that things should be free, except those inconvenient physical things, like cars, and computers, and coffee.
Here's Isaacson:
According to a Pew Research Center study, a tipping point occurred last year: more people in the U.S. got their news online for free than paid for it by buying newspapers and magazines. Who can blame them? Even an old print junkie like me has quit subscribing to the New York Times, because if it doesn't see fit to charge for its content, I'd feel like a fool paying for it. This is not a business model that makes sense. Perhaps it appeared to when Web advertising was booming and every half-sentient publisher could pretend to be among the clan who "got it" by chanting the mantra that the ad-supported Web was "the future." But when Web advertising declined in the fourth quarter of 2008, free felt like the future of journalism only in the sense that a steep cliff is the future for a herd of lemmings.So forget all that stuff about micropayments. Maybe they'll work, maybe they won't. But note this: the free lunch is over. We're either going to start paying again in some form for things like content, or that content will disappear. Newspapers that nobody wants to pay for will die. Perhaps some broadcasters will die. A lot of Web 2.0 software companies that thought they'd be advertising-supported will die.
That might seem counterintuitive -- we're in a recession, so why wouldn't free things work better? The answer of course is that free only works when there's a way to subsidize it. And if there aren't any subsidies, free gets to be a hard way to make a living.
There will be exceptions. There are Internet-based businesses that probably can continue to operate by giving things away. (I'm not saying anything about BNET's strategy, by the way. I wouldn't be in any position to know). You may not have to pay for your favorite blogs, software, and you certainly won't be paying for Google searches. Although that said, for anything digital, you are paying for the device you use to get access, and for bandwidth.
But free as a stand-alone business model is done. Even Chris "Freeconomics" Anderson conceded as much in The Economics of Giving Things Away.
A penny for your thoughts?