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I Can Find It For Free

Jan 27, 10 in Current Affairs, Internet   11 Comments

I have been involved in the Internet industry a long time.  Much much longer than most people reading this ever heard of Netscape.  Much much longer than most people reading this have been online.

Well a long time ago in a place far far away the evil empire with its death star logo known as AT&T came into the Internet access market and dropped prices by 40%, wiping out the profit margins for the startup where I was working at the time.

One of our strategies for fixing this problem was to create what we called incremental revenue.  Revenue from things other than access.  And we dreamed up all kinds of services that we could upsell our customer base on.  And being good little marketers we toted this ideas into a room with M&M's and a one way mirror so that we could watch our customers reaction to our brilliant ideas. 

Within minutes our plans were dashed.  One participant pretty quickly declared "I can find it for free at..." to a quick discussion and nodding of heads.  This was repeated over and over again.  It has been repeated over and over again in every research project that I have been involved in on the subject.  People don't want to pay for content on the Internet because they believe, they know, they can find it somewhere for free.

I bring this up as the fact that Newsday has garnered a total to 35 subscribers to its paywall service in the last 90 days.  Nine thousand dollars in revenue on a web property that cost $4 million (an ungodly sum) to redesign and relaunch.

People will not pay for Internet content that they can find for free elsewhere.  Trying to get them to do so is foolish. 

Comments

Lance, this is true and especially true for news right now. Yet, (and this is not a new argument) people who can find songs for free online continue to use iTunes and make a billion dollars for Apple every year.

I think people would pay for content online if it came with:

1) Zero effort access on a a "pleasure to use" platform. (The Kindle is our best shot at this at the moment but hopefully the iPad will change that in a few hours)

2) To quality content that is not simply a rehash (Think WSJ, investigative journalism and Gladwell articles from the New Yorker)

3) That they can preview (Boy would it be hard for me to resist clicking that "Buy now with 1 click" button for a Malcolm Gladwell article after reading the first page on a tablet!)

A significant number of people pay for access to wsj.com (including me) even though it meets only two out of the above three criteria. So zero effort access on a great platform is really the key here, IMO.


Aarjav  |  Jan 27, 10 at 09:09 AM

The key is "where you can find for elsewhere." If you're content is behind a paywall, it had better be original and nowhere else.

Urvaksh Karkaria  |  Jan 27, 10 at 09:12 AM

You make a very good point, Lance. Free is a fierce competitor and by charging more than $0 for anything you create a barrier (maybe small, maybe large) in front of it that you have to entice people to cross.

I think, then, that the key challenge you face as an entrepreneur if you have competition from "free" sources is to be able to clearly and convincingly justify why your service is worth paying for.

Don't ignore the fact that your competition is free. Don't overestimate how good your stuff is. Don't assume that people will find it as valuable as you do.

You have to make them understand the Value you drive to their Bottom Line.

I'm going up against a huge free service with OtherNum. It's called Google Voice. So what am I focused on? The areas where my non-free service is vastly superior to their free service. People will pay for products/services that they see value in.

Granted, the telephony service world is not exactly like the news content world but I think a lot of the same marketing rules apply.

Andrew Watson  |  Jan 27, 10 at 10:07 AM

Valid argument. Two other things to consider -

1. If you design your product in a way where it becomes unreplacable (iTunes, Kindle for now), you can survive in the "free" market
2. You can also make it free by bringing in advertising ... but that's a whole different model

Suyog Mody  |  Jan 27, 10 at 10:20 AM

No product is ever irreplaceable. Ever.

It can be hard to replace. It can be costly to replace. It can even be dangerous to replace but it's never impossible.

Andrew Watson  |  Jan 27, 10 at 10:30 AM

To be more, clear: If I thought Google Voice and GrassHopper were irreplaceable would I even bother launching OtherNum? No. But I'm launching it anyway. QED. :)

Andrew Watson  |  Jan 27, 10 at 10:32 AM

And yet people pay for food in restaurants rather than go dumpster diving or begging for scraps.

pbhj  |  Jan 27, 10 at 10:48 AM

pbhj: those that pay for food in restaurants are making a statement about their values and priorities. as are those who don't :)

Andrew Watson  |  Jan 27, 10 at 10:54 AM

The article was specifically about Web content and I am not sure if many analogies hold. The one that crossed my mind is that search engines are like libraries. Libraries pay publishers for the content that they then provide to their customers for free. But that horse has left the barn.

Lance  |  Jan 27, 10 at 11:00 AM

Charging for content is a dead/dying model.

I quit paying for WSJ delivery because I started just reading online, and now don't see significant enough value to pay beyond what I get for free.

Usable/Unique functionality that interacts and & builds on content, there is a value equation and business model there.

Indy  |  Jan 27, 10 at 12:25 PM

Quality vs. Quantity issue. If you are happy with quantity of content, internet is your playground. If you need (legal)quality content, you'll either pay for it or create it.

Knox Massey  |  Jan 27, 10 at 01:45 PM

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