Posts Tagged ‘YouTube’

Yesterday I went to the RSA to watch Wired editor-in-chief and author of the Long Tail, Chris Anderson, speak about the issue visited in his latest book, ‘Free: The Future of a Radical Price’. He started off by covering the history of free through the ages: from Jello who used to give away free recipe books to drive demand in the early 1900s (a pioneering marketing tactic at the time), to Microsoft BizSpark’s model in the current decade where start-ups that are less than 3 years old and have a revenue of less than $100 million can access it free, but others have to pay. 

He also presented Alan Murray (executive editor of the Wall Street Journal)’s 5 tips on charging for content, something that we often discuss at Made By Many, and that will be useful to everyone who has thought of the micro-payment system. Murray’s tips are:

1. The best model is a mix of paid and free content.

2. You can’t charge for exclusives that will just be repeated elsewhere: A timely example was the news of Michael Jackson’s death as reported by TMZ – if they had restricted access to that content, everyone else who reported it on their (free to access) blogs or sites would have got all the traffic and traffic-supported ad revenue.

3. Don’t charge for the most popular content on your site. 

4. Content behind a pay wall should appeal to niches. 

5. The narrower the niche, perhaps the better. 

You can read Murray’s thoughts in detail here. 

In Anderson’s words, the best model is not paid vs. free but ad-driven free vs. ‘freemium‘. 

The newspaper industry had to be touched upon, of course. In fact, Malcolm Gladwell has focussed on this aspect of the book in his review of it in the New Yorker. Anderson mentioned during the talk that he responded to Gladwell on his blog, and said that he felt that as far as journalism was concerned, the world has changed from traditional journalists being the authors of most forms of (paid) news in the past, to anyone becoming in author in today’s times and publishing their content for free, thanks to the web. So his solution is ‘to scale the economics of media down to the hyperlocal level’ – get people who are have alternate day jobs to contribute in return for non-monetary gains. Specifically, he was speaking with regard to his experience with GeekDad, a community that he runs. Now this is unlikely to be the salvation of the newspaper industry but ad-driven free vs. freemium is the model that remained with me as most likely to succeed. Co-incidentally, in response to a question from the audience following the talk, Anderson said that he did not think that micro-payments as a system would necessarily work because it was a question of the psychological vs. the monetary downsides of paying for a news article (’what the hell, I have to pay, can I be bothered’) - so personally though I wouldn’t mind paying £1 for a good piece (and with a proper audience that can multiply to very profitable heights – YouTube was an example someone from the audience quoted – 75 billion videos x (hypothetically) even 2p would be a decent sum of money), it’s a question of whether psychologically you think the benefit is worth the money, and that’s not always easy to gauge. 

A few thought-provoking ideas I left with:

1. Joseph Bertrand (1883) said that in a competitive market, price falls to the marginal cost. Is free anti-competitive, because it sets the default price to zero?

2. Anderson’s book is also being released as an audio-book in 3 hour and 6 hour formats. They are going to charge for the 3 hour format but not the 6, because in his words, ‘time is money’. So at what point does a piece of content become valuable enough to pay for so you don’t waste your (probably more important) time?

Here’s the presentation: it’s the same one he gave at the Wired business conference in New York 2 weeks ago.

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