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Free vs. paid content, Anderson vs. Gladwell

30 June 2009 · By Earl J. Wilkinson
A soon-to-be-released book by Wired editor Chris Anderson will spark intense new debate about the value of content in an abundance model versus a scarcity model – pouring gasoline on the already white-hot media industry discussion of how much readers should pay for content creation.

Days before its release, Free: The Future of a Radical Price is already super-charging the debate in the form of a long-distance debate between Anderson and The New Yorker’s Malcolm Gladwell. For fans of The Long Tail and The Tipping Point – two groundbreaking books by the respective authors – it’s a debate not to be missed.

In a nutshell, Anderson sees the whole world going free due to digital technology, and Gladwell doesn’t. Anderson paints the very-near-future as black-and-white, while Gladwell suggests everything isn’t moving toward a free model which he points out is not a simple model.

Free: The Future of a Radical Price is the latest Anderson book looking at how the new economics of the internet profoundly affect everything around us. In this go-around, Anderson argues that digital technology has made the world a better place – in this case, driving certain customer price points to zero.

Borrowing a well-worn Tom Friedman observation, the bricks-and-mortar world represents “atoms,” and the digital world represents “bits.” The world of atoms thrives on the economics of scarcity, while the world of bits thrives on the economics of abundance. Going from atoms to bits is going from expensive production and distribution to a cost structure of next-to-nothing.

Lower content creation costs are destroying companies that professionally create content, but benefiting consumers and ushering in an era of flowering creativity.

The net effect of this what you would expect: higher variables in pricing models and lower content creation costs.

Yet Anderson goes beyond this in his book, his response to Gladwell, and subsequent interviews:

  • Advertising is more functional in an online environment than print.

  • News is more readable in an online environment.

  • Certain content can be produced for free by volunteers as well as professional journalists.

And newspaper publishers need to face these facts and get over it – fast, Anderson seems to constantly be emphasising.

“Out of the bloodbath will come a new role for professional journalists,” Anderson writes. “There may be more of them, not fewer, as the ability to participate in journalism extends beyond the credentialed halls of traditional media. But they may be paid far less, and for many it won’t be a full time job at all. Journalism as a profession will share the stage with journalism as an advocation. Meanwhile, others may use their skills to teach and organize amateurs to do a better job covering their own communities, becoming more editor/coach than writer. If so, leveraging the Free (yes, Anderson capitalises the word) – paying people to get other people to write for non-monetary rewards – may not be the enemy of professional journalist. Instead, it may be their salvation.”

Gladwell admonishes Anderson by saying “it is not entirely clear what distinction is being made between ‘paying people to get other people to write’ and paying people to write. If you can afford to pay someone to get other people to write, why can’t you pay people to write?”

In Wired magazine today, Anderson answers by citing a parenting blog he founded called GeekDad that he put together with friends featuring volunteer contributions. From this evolved a web site that has attracted a sizable audience that attracts advertisers. Writes Anderson: “Somewhere down the chain, the incentives go from monetary to non-monetary (attention, reputation, expression, etc.).”

While acknowledging this might not be a model for the newspaper industry he said “it is the only way I can think of to scale the economics of media down to the hyper-local level.”

In a subsequent interview with PaidContent.org, Anderson says newspapers must decide which parts of their content universe they will offer for free – around which services can be sold – and which should be repositioned as premium content. The issue for newspapers isn’t free, but “freemium.” Referencing his Long Tail book, Anderson suggests giving away the head and charging for the tail – a la the Wall Street Journal, which he calls the model for “premium newspapers.”

Yet here’s the caveat: “The problem is that there aren’t many premium newspapers,” Anderson says. And there it is: The Wall Street Journal is a terrible model for 99% of newspapers because premium content for a high-earner business audience just isn’t the norm.

During the PaidContent.org interview, Anderson talks about possible models for publishers:

  • Wired magazine provides three pricing tiers: free on the web, US$5 for a print magazine, and US$0.80 for monthly subscribers. The future Wired will have many tiers.

  • Golf Digest is considering a club tied to the magazine, Anderson says. “Members” might get lessons or discounted access to courses.

  • Building community around content is a model used by Condé Nast.

“Many content creators believe that quality will win out, but Anderson believes that it is more about relevance than quality,” according to the PaidContent.org article.

Free: The Future of a Radical Price will either be an eye-opener for publishers or a conversation starter. It won't be boring. I strongly recommend the book, and I strongly recommend the Anderson vs. Gladwell debate. Dissecting this debate will advance our industry's conversation about the value of content.


* * *

Post-Mortem (June 30, 16:55): The internet is on fire about this book. Author Seth Godin just posted a fascinating comeback to Malcolm Gladwell, titled “Malcolm Is Wrong,” which you can view by clicking here. Writes Godin: “People will pay for content if it is so unique they can't get it anywhere else, so fast they benefit from getting it before anyone else, or so related to their tribe that paying for it brings them closer to other people. We'll always be willing to pay for souvenirs of news, as well, things to go on a shelf or badges of honor to share. People will not pay for by-the-book rewrites of news that belongs to all of us. People will not pay for yesterday's news, driven to our house, delivered a day late, static, without connection or comments or relevance. Why should we?”


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About Earl

Earl J. Wilkinson is executive director and CEO of INMA. In his interactions with INMA members worldwide, Earl has one of the broadest views of newspapers of anyone serving our industry today. He is a trendspotter and a leading advocate for cultural change, transformation, and innovation. This blog represents his unique view of the emerging global news media industry.

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