Can free be profitable?

 

I’ve been reading Chris Anderson’s latest work, “Free,” and am finding it a great argument against the movement afoot by newspapers to begin charging for its online content.

Anderson’s book focuses on why the adding cost to a product does not necessarily give it value, and why giving something for “free” does not diminish its value. In fact, free can be a door into profitability.

The problem for newspapers, though, is that those who are looking at charging content are basing it on old business models. However, we’re finding those model are no longer working in print. Why should we expect them to work online?

Forcing people to pay for what they got for free will not build readership and future customers. Anderson points to a computer hardware website that has used a business model of providing free hardware in raw form, or completed versions at cost. The model for its success:

1. Build a community around free information or advice on a particular topic.
2. With that community’s help, design some products that people want, and return the favor by making it free in a raw form.
3 Let those with more money than time/skills/risk-tolerance buy the more polished versions of those products. (That may turn out to be almost everyone)
4. Do it again and again, building a 40 percent profit margin into the products to pay bills.

Newspapers are devoting time and effort to thinking up new ideas that might or might not work. They’re hiring consultants and professionals to tell them where they should focus and what they think will sell.

How many have actually opened a dialog with their readers to find out what they want, let alone who they are? And, once they have, why not offer a tiered system that provide free information in raw form, but premium services that could save readers time and inconvenience at cost?

The free horse is out of the barn, and it’s time to look at providing providing services that let readers ride the horse, at cost.

Anderson offers a free version of his book at this link. Yes, it is a raw version that cannot be downloaded, but it is free.

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One thought on “Can free be profitable?

  1. From a consumers point of view…. here's mine.

    I am already paying for the internet to read the paper/news or whatever I see advertisements on your site. Sometimes I click on them if it's something that might interest me.

    But why should I pay a premium price for the internet and theb then see ads all over the page If the paper wants to charge me for the content?

    Reply

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