Texas Liberal

All People Matter

That Free Web Content You Enjoy Is Likely Costing Somebody A Job

The Economist has an editorial this week saying that the model of free web services sustained only by advertising revenue is for the most part not viable.

From the editorial—

The idea that you can give things away online, and hope that advertising revenue will somehow materialise later on, undoubtedly appeals to users, who enjoy free services as a result. There is business logic to it, too. The nature of the internet means that the barrier to entry for new companies is very low—indeed, thanks to technological improvements, it is even lower in the Web 2.0 era than it was in the dotcom era. The internet also allows companies to exploit network effects to attract and retain users very quickly and cheaply. So it is not surprising that rival search engines, social networks or video-sharing sites give their services away in order to attract users, and put the difficult question of how to make money to one side. If you worry too much about a revenue model early on, you risk being left behind.

Ultimately, though, every business needs revenues—and advertising, it transpires, is not going to provide enough. Free content and services were a beguiling idea. But the lesson … is that somebody somewhere is going to have to pick up the tab for lunch.

(Just as a note, I have a paid print subscription to The Economist.)

I’m glad The Economist ran this view because I often wonder how people think the web services they enjoy and use can operate if they are given for free. Even more so, I wonder how it has come to be that people feel entitled to use something for free.  

For all the financial  problems with newspapers these days, the problems are not the  result of a lack of readers. When you figure in web editions, more people are reading the newspaper—in one form or another—than ever before. It’s just that people are not willing to pay for the services they are using.

At core what folks want is something for nothing. The bottom line is not some type of information revolution or technology revolution. It’s the lure of something for nothing.

Content costs money to produce. People may think they are getting something for free–But what is really happening is that people are losing their jobs because nobody will pay up. This is the cost of so-called free content.

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March 24, 2009 - Posted by | Uncategorized | , , ,

9 Comments »

  1. I agree with your main premise, however, free content is here to stay. Publications such as The Economist will attract paid subscribers because of the high quality of their specialized content, which is not available everywhere. “General news” is provided by Google, Yahoo, MSN, etc. as well as bloggers, such as “celebrity news” bloggers for which there is a huge audience.

    Local newspapers won’t be able to compete with these free news sources. Online local papers could offer a very cheap annual subscription which would help them maintain a base of subscribers and reduce the costs of producing a physical paper. Local & regional readers do respond to local ads, but if a newspaper is online, additional advertising venues can be offered that appeal to online readers and help generate more ad revenue.

    Newspapers will have to come up with innovative revenue models or shut down. Don’t blame the readers for wanting free content. It’s not up to them to come up with a solution.

    Comment by Renee | March 24, 2009

  2. Renee–Thank you for your comment.

    While it may not be up to readers to solve the problem of making money online, it is up to readers to determine what they value.

    The now online Seattle newspaper has only 20 or so employees. There is little chance it will be able to cover the Seattle-area very well.If people in Seattle realize it or not I don’t know, but they made a choice not to support that paper and the community as a whole will pay the price.

    I’ll be surprised if any all online local paper will be able to have the staffing levels needed to really cover an area well. People in cities across the nation can decide if they will support these papers or not. People decide all the time to lay out big bucks to support sports teams in cities across the nation.

    That is the problem for people to decide upon and solve or not.

    Comment by Neil Aquino | March 24, 2009

  3. I don’t think that people consider the content of their local papers to be “premium” as they would The Economist’s content. But yes, communities will suffer as papers fold, I totally agree. A guess is that perhaps more narrowly focused papers might take their place, niche papers that cater to families and their interests, or to singles, etc. Do I think this is better? No.

    Perhaps newspapers should sponsor local community forums a la Salon.com where people can participate? I think the newspaper model needs tweaking…people don’t necessarily just want to read about the news, they want to voice their opinions.

    Comment by Renee | March 25, 2009

  4. Well…If we reach a point where people just want to spout off…I guess they’ll all have blogs like myself.

    I can tell you that having a blog does not pay so well and the 1600 hits or so a day I get here is as a relative matter good traffic for most blogs.

    I’m not sure what kind of real future that is going to be for us as a society.

    Comment by Neil Aquino | March 25, 2009

  5. I never said a blog. Despite the exponential growth of blogs, your average citizen has nary a clue nor the desire to maintain one. They only want to put in their 2 cents here and there on issues that concern them. If online newspapers charged a subscription which included a “Town Hall” type forum this might help. Print issues have Letters to the Editor and Op-Ed columns, but a forum would guarantee that everyone could participate…for a fee, of course. They could run polls on national, regional and local issues, the Pulse of “My Town” type thing, have commentaries, etc. Yes, there are issues such as those who don’t have online access that will have to be addressed.

    What’s in it for newspapers? Free content for them.

    Our communities will suffer in the interim as local papers shut down, but I don’t think it will be a permanent void. I’m hopeful about the future despite not seeing a clearly defined blueprint. After all, this is America.

    Comment by Renee | March 25, 2009

  6. I endorse what you are saying about print newspapers and the people who do or do not read them. It will be a sorry day indeed for the people of our country and the freedoms we enjoy if the print newspaper no longer exists. Opinions are not a substitute for the hard digging into issues we all need to know about and take the time to comprehend.

    Comment by Newton | March 25, 2009

  7. Renee—Thanks for your ongoing comments.

    I’m not sure how long a void we could stand on the matter. There is a lot(more)that folks in power could get away with in even a short time without anybody watching.

    You are right that there are new models to explore. Let’s hope that these new models can co-exist with a print paper. I think in many cases they will.

    Newton–Thank you for the comment I agree.
    Newton—

    Comment by Neil Aquino | March 26, 2009

  8. “There is a lot(more)that folks in power could get away with in even a short time without anybody watching.”

    That is prime. People do watch local news on TV, perhaps even prefer this way. I certainly agree that losing local newspapers will give rise to more corruption as there will be one less media outlet to report it. Unfortunately, while we can wish that our fellow citizens develop better critical analysis, the reality is that many are struggling to keep their heads above water as jobs & benefits disappear and they’re preoccupied with getting through their own problems. You may not live in such an area, but I do.

    I share your fears about the loss of print papers, and hope that a publishing visionary can create a complementary model.

    Comment by Renee | March 26, 2009

  9. I live in an area where most people don’t care.

    I’m hopeful that most papers will hang on. I guess we’ll see.

    Comment by Neil Aquino | March 27, 2009


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