What does Free Mean to you?

July 16, 2009

youtubeThere are many ongoing debates on whether or not the nature of free information on the web can continue to last.  As free content continues to put at risk the traditional media sources that charge their customers to get the information, it also has proven tourblesome for many of the companies that offer the free content.

For example, this story from the New York Times discusses the many issues with Youtube.  As Google continues to try to find big money in advertising dollars for the most popular video sharing site on the web, the cost of storing the infinite amount of videos uploaded to the site everyday is out of control.  It appears that no amount of advertising can possibly make up for the money lost just on server space each year.  Therefore, at this point, Youtube looks like a failing business for Google, and one they will need to evaluate over time.

In addition to Google, there are entire industries that are caught in between free models and paid models.  For example, CNBC recently aired a special on the porn industry, and how they are caught trying to embrace the internet and trying to protect their profits at the same time.  For porn, free videos online have taken a big swipe at profits from paid sites as well as dvd sales, which some say are down close to 30% this year.

Once something is available for free, it decreases the likelihood that anyone would want to pay for it.  Whereas in the past you could say, “you get what you pay for”, nowadays the quality of content and information you can get for free is many times just as good as the stuff that you pay for.  We are approaching a time and a place where Free is costing businesses a fortune.  And eventually, Free may hit a brick wall.

How much is Google willing to lose on Youtube before they charge you to upload videos?  How much is Facebook willing to lose before they charge you to share photos, or to write on someone’s wall?  How much are we all willing to pay to use the sites we love so dearly?

Right now there is no balance between free and pay. The time is coming when we need to find that balance or internet users and businesses alike are in for a major shock.

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If You Force Me to Change, I’ll Fight You

May 28, 2009

newspapersWe have seen it time and again in business and in society as a whole.  If you force someone to change their behavior for whatever reason, they will fight back.  They will resist what does not come naturally, and they will hate you for pushing this change on them.  Lots of them will simply look for a new alternative that will allow them to keep up the status quo.

Governments can force corporations to change
the way they act by enforcing new laws and taxes and business activities.  And those businesses that can afford to do so, will fight back.

Companies can force consumers to change by reinventing a product or service that we have come to know.  Many times customers will fight the change, because it is new, and look for any way to get the products that they are already used to.

Companies can force their competitors to change
by shifting the way their industry behaves or creating a new model for success.  And those business that find themselves behind struggle to turn things around.  They fight the innovators, claiming that they are cheating or that they’re wrong.  They fight with politicians to get some protection.  And they fight with their own customers to avoid losing them (see if that makes sense).

Enter the printing industry in all their luster.  Enter newspapers and magazines and major publishers.  Enter paid content providers.

We are in the midst of a content revolution.  Advertising markets are down everywhere you look.  Major media companies that have relied on newspaper and magazine circulation to thrive are losing money in a hurry.  People don’t want to pay for their information, and advertisers don’t want to pay not to be seen anymore.

Too many online content providers are succeeding in a free model system.  The issue is that the publications that have been around and successful for so long as pay services don’t know how to react.  So most of them fight the change.  They ask the government for help.  They ask consumers to make difficult choices.  And they spend all day firing back at those free content providers that have made it work.

Publishers are being forced to change, and because of that, they are fighting that change.  It’s time to rethink distribution, rethink salaried reporters, rethink free vs. paid models, and rethink consumer behavior.

I can get free information on technology and small businesses via TechCrunch, on business and investing via Bloomberg, on the law via Above the Law.  They have made free information work by making money on other ventures or in other ways.  They are valuable to me, more valuable to advertisers, and they are winning.

Change has come.

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