Wired magazine's US editor-in-chief has some
forthright, and well-judged, views on life and, more specifically, the changing
business landscape in the digital age.
His best-selling book, The Long Tail - which espoused the
value to be tapped in the multitude of niches within the market - is soon to be
followed by his next foray (Free - an exploration of the ‘radical price point
of zero').
Speaking on Friday, at a Conde Nast-organised Wired seminar,
Anderson, interviewed by UK Wired editor David Rowan, talked, among other
things, about what "free" means for businesses - and in the crudest terms, it
seemed to boil down to getting people hooked on a free, possibly inferior
version of your product, then charging them for the good stuff. Sound familiar?
It's a model much loved by drug dealers on many of our less-salubrious estates.
Explaining in more detail, "free", in this instance, can't
mean you give everything away for free. While the nature of the internet is
driving the price point to nothing - falling storage, server and bandwidth charges
- a purely ad-funded model is still not a good idea in the current market. Companies, said Anderson,
are shifting their model to direct payment - they want to be cashflow positive
now
What he suggested is that businesses need multiple versions
of their products, in order to give away free to the majority, but get about
5-10% of people to pay for the same content or a premium version of it.
In Wired terms, Anderson
explained, this means giving the content away online for free, but getting
people to buy the magazine. Sounds easy enough, although this week's ABCs will
show the last bit is a little trickier in reality.
The "freemium" model - some free content with premium
services paid for - is already operated by a few major publishers, The FT being
the obvious UK example, and is
how Anderson
sees the future of content provision being funded. The Wired model, free online
content but a paid-for print version, is pretty much what every remaining
publisher adheres to. But at the moment, for many, this latter iteration of the "free" model is not working.
Removing the ‘walled garden' and offering total open access,
relying solely on ads for revenue has been the rallying cry of the majority of
traditional publishers as they charge headlong into the digital age.
The fact they are all are finding it tough to replace the
lost print advertising and circulation revenues by generating cash from even
huge online audiences makes either of Anderson's suggestions (free online and
pay for print, or some free online and some paid for) a little hard to square
for everyone in media who's currently struggling.
"Getting someone to pay for something they love is a nice
problem to have," said Anderson
on Friday. Unfortunately, driving prices higher at any time, let alone in a
recession, and let alone from free to paid for, is not an easy task.
Anderson
has a well-deserved reputation as a deep, solid thinker and it would be unfair,
and a mistake, to prejudge his Free book on the basis of a half hour interview,
in which it wasn't even the main topic.
But, it does feel as though free is just how it is. There is
no going back for publishers. There is no chance that people will start to pay
for something they've enjoyed for free for so long. And there's not much, if
anything, in terms of information, that an average consumer is now, or will be
in future, willing to pay for.
Which only begs the question, if the ad-funded model doesn't
start working, and people aren't prepared to pay for information, how are media
businesses ever going to fill the revenue void?
