What it Means To Be “Free”

 (L to r) Anderson, Hoenig, Sargent and Murray at NYU Media Talk
(L to R) Anderson, Hoenig, Sargent and Murray at NYU Media Talk

When I heard Chris Anderson, Editor-in-Chief of Wired, was going to be moderating a discussion on “Free and Paid Content” this semester as part of the Media Talk series sponsored by NYU’s Center for Publishing, I did a little dance and signed up immediately. I have to admit that I am a big Chris Anderson fan. Not only do I read Wired, I pay to have it delivered to my door.

Sitting in the Condé Nast auditorium, I knew we were in for an interesting night. Chris Anderson was on one side, flanked by Gary Hoenig, Editorial Director and General Manager of ESPN Publishing; John Sargent, CEO of Macmillan; and Alan Murray, Deputy Managing Editor and Executive Editor, Online, The Wall Street Journal. You can watch the video at http://www.scps.nyu.edu/areas-of-study/publishing/news-and-events/media-talks/free-and-paid-content.html

Meanwhile, here are some of the most interesting points made by the panel:

Chris Anderson began by clarifying the title of his most recent book, “Free: The Future of a Radical Price” (which, if not for the sanity of his editor Will Schwalbe would have been called “Freemium” or “The Culture of Abundance”). The book is not about creating a revenue-free product, but about generating revenue from a small number of people, so that most don’t pay for online content.  Chris described a new economy in a digital world in which “you give away 90 percent to sell 10 percent.”

Gary Hoenig talked about how he created a $1 offer for an annual subscription that included access to ESPN’s “The Insider” site as a way of driving internet traffic. So far, he noted, this has generated more Web subscriptions and been successful. All the panelists noted the prevalence of this “upselling” of premium content as a way to increase revenue and audience. Hoenig pointed out that revenue is not infinite, and that even with editorial separation, it can distort content.

John Sargent had some opposing views on free content, observing that books are different from newspapers or magazines: generally one-off sales, rather than subscriptions through ongoing customer relationships. He commented that while consumers value eBooks less than printed copies, publishers are stuck with largely the same expenses to produce them: only $1.50 of the cost of a book actually goes to the physical production. He also made some interesting points about the distribution of free backlist eBooks as a marketing strategy. By giving away an author’s previous book, you spike interest and get a bump in sales for the new frontlist title. However, he said that you also begin to devalue content; as consumers become accustomed to free backlist titles, they realize that they can simply wait until the next book is published, and get the previous one for free. Over time, he believes, giving away free eBooks directly affects sales.

Alan Murray from The Wall Street Journal noted the Journal‘s strong business coverage and success charging for online content. (The Journal has more than $1 million paid subscribers.) He called the panel’s central question of whether people will pay “silly.” Murray made a strong argument for the pay wall being reconsidered by many publications that spurned it in the past. If you have good, unique content, he said, then consumers will be willing to pay for it.  He also revealed the Journal’s devotion to tracking numbers, comments and search terms and said that “Part of my daily process is getting feedback from the 5,000 people I’ve never met.”

All in all, the evening sparked some pretty strong debate and tons of questions from the audience. Here are a few I wished I could have asked:

To: Chris Anderson: You pointed out that in distributing free versions of your book online, “Free” consumers were confused and mistakes were made. If you could go back, what would you do differently? And do you know how this campaign affected sales of the book?

To: Gary Hoenig: You mentioned tracking web metrics, to the point where you know exactly which article produces sales. Do the rest of the editorial staff pay such close attention, or are these metrics generally used to optimize ad sales?

To: John Sargent: How do you feel about the Kindle book pricing model of $9.99? Is this devaluing front list content and would Amazon have been better off selling the Kindle at a much lower price and subsidizing it with a higher eBook price point to retain perceived value?

To: Alan Murray: Is Rupert Murdoch insane to try to place all content behind a pay wall at this point in time? How successful do you think he will be?

Even if I never have these questions answered, I loved the debate that sparked them.

by Naomi Kennedy

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2 thoughts on “What it Means To Be “Free”

  1. Hi Naomi, thanks for your question. The metrics are actually used by all of us who are involved in editorial. They give us a sense of what drives readers to the site, and sharpen our instincts on what to do in the future. We don’t use them to determine that we did this today and it didn’t sell, so let’s not do it tomorrow, but rather to refine an overall sense of what constitutes a successful paid content site. We’re also trying to refine the difference between content that drives an actual sub purchase, and content that provides the stickiness that keeps people coming to the site. In any event, it’s all more information to enrich editorial judgment. Right now, ad sales are an insignificant factor in our decisions, and in some ways that’s the best part.

  2. One question that I wish I could have had answered by all the panelists involved aggregators. In a recent Newsweek article (http://www.newsweek.com/id/214832), Lyons proposed that old media should cut off all of the aggregators who are taking their content and are making money off of it by selling ads.

    I was wondering what publishers thought of this idea, and if they agreed with it, would it ever come to pass?

    If anyone has figured out the true value of free content, it’s the aggregators.

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