Friday, July 3, 2009

Two pop thinkers and their fight about zero; Times Online, 7/1/09

Antonia Senior via Times Online; Two pop thinkers and their fight about zero: Can the online generation expect everything from music to newspapers to be free? Two leading authors furiously disagree:

"There was a life before the internet. It’s hard to imagine now, but when people wanted to find stuff out or read things, they had to stand up, walk to a bookshelf and brush away the dust. And, get this, people would, once upon a time, expect to pay for the movies they watched, the books they read or music they listened to.

The notion of media being free online, whether legally or illegally, is at the centre of Chris Anderson’s new book, Free: The Future of a Radical Price. Anderson’s first book, The Long Tail, was much fĂȘted. But his second work has attracted a fierce critic in the shape of Malcolm Gladwell, the lauded pop-thinker and author of the seminal books The Tipping Point, Blink and Outliers...

[Anderson] began to be more interested in “freemium”: the idea that any product has two versions — the free and the premium. If this sounds familiar, it’s because it is. In the early days of the internet, freemium was the model most media outlets tried. Give consumers the bait, hook them in, and convert them to cash. But they didn’t convert. As Anderson says, the gap in the consumer’s mind between 0p and 1p is infinitely greater than the gap between 1p and £1.

The next model tried was the freeconomy model. There was a rush to give away all content free. Old-fashioned media subsidised new, waiting for the advertisers to come in and plug the funding gap. But they didn’t. Media outlets are in a bind. A quick suicide if they do not embrace the internet, a slow death if they do. They are moving back towards freemium, but a reimagined version.

“The gaming industry,” Anderson says, “ is the one getting it right. They all tend to use the same model. Use free to build the biggest possible audience, then convert about 10-20 per cent to paid, using something that’s non-punitive.” Online gamers can play free, but can pay for cheats that save time, or cool add-ons for their avatars.

The logic of Anderson’s argument, which suggests that only the best-content providers will be able to monetise their free content, leads to conclusions that he shies away from. Only a few will be able to make the conversion from free to a hybrid of free and paid, and there will be copious casualties across a range of media, from record labels to newspapers.

Gladwell, like Anderson, is a journalist, and perhaps wants to shoot the messenger. He may not like Anderson’s take on the way that the expectation of free goods is dictating the economics of the internet. But that does not mean Anderson is wrong. The brutal truth is that if consumers cannot be induced to pay for content, and the advertising does not pick up, much of the media as we know it is doomed."

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