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.