Watch CBSN Live

Linking and Free Content? It's the Old Features Vs. Benefits

I had an epiphany while reading Virginia Postrel's New York Times Sunday Book Review piece on Chris Anderson's Free: The Future of a Radical Price. Postrel was going through what has become a fairly common discussion of the book and the ideas of cross-subsidy (giving away in one place to make money in another), the infinitesimal cost of distribution, and the exploding number of suppliers of content. Suddenly I realize that publishers have largely been going about the free versus paid debate in completely the wrong manner.

Most people, at least those who produce content, are painfully aware that the marginal cost of creating a digital copy of something is essentially zero, but that the fixed costs of creating the original are as high as ever. (Or, given inflation, higher than ever.) Although I haven't read Anderson's book, I've seen him blog that the idea is to give away something and then to charge for the valuable stuff that at least some people are willing to pay for, and not the more common assumption that free means give everything away and hope that advertising or the Fairy Godmother will pull your business posterior out of trouble.

Postrel writes, "This technique is as old as the supermarket loss leader or TVs in sports bars." But that's where I think she goes wrong. Free content isn't a loss leader. It's the sample counter at Trader Joe's, where many people taste and, presumably, enough buy the featured mango sorbet to more than make up for the cost of the samples. And that's when it hit me: content has no value.

That may sound idiotic coming from someone who makes an entire living from creative endeavors, but hear me out. The free versus paid content conundrum is actually akin to the old marketing adage that you sell benefits, not features. That's because people largely don't care about what features you have in a product. Those features are all about you, not them. They could give a chocolate-covered fig as to whether you make money. But as soon as you can show them that the slow churning on that sorbet gives a dense, soft, rich, and fruity spoonful, they take real interest.

Writers, artists, musicians, and other creative types have an inherent business problem when they stress the importance of their work. "Society needs it," or "It costs me too much to give it away," or, "Why should I work for free?" All this talk is really about them and what they do and what they want. All of it is feature talk and no one outside of their immediate family (and sometimes not even them) gives a care. Why should people pay for creative content when they didn't ask for it and don't see that it offers a single benefit?

But the advantage that free content can have, if done smartly, is that, like the taste of that sorbet, it may catch someone's attention and suddenly present itself as a benefit. For some portion of the populace, that becomes worth paying for. It's not theory for the media, as a number of publishers have shown that it can work. The most common examples are The Wall Street Journal, The Economist, and The Financial Times, all of which have paid sites but also make some material available. at which point some terribly smart person points out that "people are willing to pay for financial information."

If those don't work for you, then check some of the sites of Meredith Corporation's titles, where you'll find some material available for free and plenty under lock and key. For the first nine months of its 2009 fiscal year, which goes from July 1 2008 through March 31 2009, revenue was at $1.1 billion. That was down about 8.3 percent from the previous year, but look at the timeframe again. That includes the worst of the economic slide. Ad revenues were down 12 percent in January through March, but that is still significantly better than the 20 percent decline that the industry as a whole faced.

Apologies to Mr. Anderson, but there is actually nothing new at all in the idea he suggests, even so far as it applies to media. Rather, it's getting back to business as usual. What else do you call newsstand copies that people can flip through? What else do you call book store browsing? Certainly, when people go to a newsstand or a book store, it's because they are already in a buying frame of mind, so the chance of selling at least something climbs. When they go to a web sites, it's more likely that they just want to find some information, like a trip to the library. But that doesn't mean that you can't convert them, which gets to the argument of why you want a lot of traffic coming in: the smaller the conversion number, the larger number of prospects you need.

Some publishers are finally coming back to earth and realizing that when online ad inventory is immense and prices cheap, you can't count on being sustained by the visits from strangers. But some seem intent on returning from orbit, plummeting into the ground, and again burying their heads in the sand. The New York Times is at least considering a monthly access fee to its web site for all content. Back to chasing out the customers when they flip through a magazine on the newsstand.

What publishers need to realize is that the answer to their problems is not a simple black or white. The grocery store doesn't have to lock everything up in cases. They can still have plenty of free samples -- just so long as they remember that providing a taste isn't the same as removing the cash registers and leaving the store door unlocked at all times.