FREE vs FEE Debate - Part II
WOW, thanks so much for all the responses and emails. I think the Free vs Fee Debate is real.
In case you didn’t read it - http://chadrothschild.com/social-media/free-or-fee-debate
Of the tons of responses, the number one concern is about if a company gives away all of its content, then how can the company viably make a profit?
First, there is no rule you can not charge for your content. The dilemna is that the person reading wants it to be free and the person providing wants it to be very expensive. You just have to make sure that your content is unbelievable, because that will determine the volume of people who are willing to pay for it. If people feel it is incredible, then it can spread. The lower barriers you put on your content, the better chance it has of spreading horizontally.
The real issue and obstacle is that online content is expected to be free and for a most part it is. So it really comes down to quality of content “perceived” by every person in “their world”, their circumstances etc.
One way or strategy is if you are giving something away… then you are doing something indirectly to generate revenue from it. So if you are giving info away to become a trusted resource and show why you are the expert in your field, then you may be able to sell your product or service because you are in their mindspace as a leader. You also may have consulting gigs, books, speaking engagements, training or other avenues.
Seth Godin talks about this in depth in Ideavirus (from 2000). He talks about how music executives were first afraid of radio because they were just giving it away, However, music exec’s saw how powerful it was and were begging DJ’s to spin their music because it brought awareness. So they did not make money on the music on the radio, but they did made big money on concerts, albums and merchandise. The music exec’s had the same reaction when MTV came a long and even more when Napster came…
How do I control who has access to my information so my competition does not get it?
I think I have said it before, but you really do not have control. If you have some secret sauce, then don’t share that… make that your premium content. I see a lot of companies use the tactic of sharing the what, where, when & end results, but do not give the actual framework or the how to do it. This may be a way to safeguard your intellectual property.
You can also make people register before you let them view your info. A lot of news periodical sites make you do that if you want to view their info. See who is coming to view. There are definitely ways to ambush this though.
I truly believe it is more important to worry about the customer than the competition. I see it as a race to their mind space. If you do a good job and really lodge yourself in there, it will not be as easy as you think to remove it.
With so much free content out there, if I do charge, how do I make sure mine is not invisible?
Well I think Tim Negris in his comment yesterday put it better than I could so I will share, “Across the spectrum of intrinsically digital content types, value is in part a function of currency and uniqueness, to be sure. But a bigger part of the equation is, in my opinion, the balance between signal and noise which is manifested differently across the various content instance types.” So make sure it is “remarkable” (like Seth Godin would say), that it is so unique it cant be found anywhere else. I love his signal to noise insight, and you can look at the last post’s comments and see some of his examples. That really does matter. When Satellite radio first came out, many people were buying subscriptions to just get rid of commercials. It was unique with very little noise.
Is there a hybrid version or way to give it away for free and then once it catches on charge for it or have some free content and some premium paid content?
Absolutely. There is no hard and fast laws or rules. If you are going to try to do the first one and offer it free for a while and then charge… I think there is a very fine line you play on that tipping point of when to start charging. Timing will be critical. You have to make sure that when you pull that trigger, there is a way to make sure there is a pay off at the end. Some may do well when they charge and others may flop. The demand for paid content may or may not be as strong as anticipated. Seth Godin wrote “The challenge is also to be patient enough to wait to introduce the friction of charging at just the right moment.”
If you are going with the latter, there could be tons of examples, but Marketing Profs is a great example of this. They have some blogs and stuff they give away, but they have a premium section for members only. I am a member and feel the value is well worth the small investment. There is many different strategies you can use to approach this. I have seen some authors give away a couple chapters of their book. This wets the appetite a little with “sampling” and at least gives you a better shot of someone feeling it is worthy.
In the comment yesterday by Lori Philo-Cook about the banking industry, they are giving away free checking, free online services etc. There are real costs to those which means they are not “free” but have to be made up in other ways.
So the hard answer is it depends… on that companies circumstances, target market and what they are trying to accomplish. I think it really deserves internal debate, research and look at best practices of similiar companies.
I do know this. There is no magic bullet. So let the debate continue and let us see what other things we can uncover and get us closer to helping each other out.
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Another great, thought-provoking post. Regarding the question of a strategy that has some content for free and some for fee, I take a lesson from the way a number of research companies, both quantitative and qualitative, are merchandising their content.
The quantitative researchers produce a lot of statistical and numerical data that gets used in two ways, citation of facts, e.g. how many single parent households in the US in 2009, and analytical research, e.g. the rate of growth of single custodial fathers since 1960. The qualitative researchers generally produce topical, long-form reports examining trends, processes, etc, that are usually employed in business decision-making, e.g. attitudinal research about infant daycare.
For both types of research organizations, the Internet has changed their business models somewhat. Before the Internet, they were all in the business of selling printed reports, and they worked very hard to prevent and prosecute illegal copying, and to differentiate themselves based on depth, accuracy and specialization. But, the Internet brought demand for electronic distribution, which made it impossible to prevent copying. It also made it easier for new research companies to enter the market and compete with the old guard, especially because publishing no longer equaled printing and mailing.
Now, most researchers can no longer charge as much as they once did for data and reports and they have much more competition than ever before. These changes are making them more focused on acquiring subscribers rather than just selling reports and competing based on the timeliness and uniqueness of their products, rather than simply providing higher quality products that are otherwise similar to those of competitors.
As a result, the quantitative outfits are now giving away simple factoid type research to attract subscribers for the in-depth focused analytics and the qualitative shops are giving away whole reports to attract customers for high-value strategic consulting services.
Notice that these models are not simply a case of giving away summary information and charging for detailed information. They are giving away products of one type, products for which they used to charge handsomely, and charging for products of a different type, often products that they didn’t used to sell at all.
The free products serve three purposes, none of which are simply teasing. For prospects, they attract site traffic and consideration, and they demonstrate competence and relevance, and for existing subscribers they build good will and derivative content presence, i.e. “citation branding”.
This model is probably adaptable to many other kinds of content, but many content providers will doubt it and fight it because it forces them out of their comfort zone, from mere provisioning into promotion and new product development. Many old guard content publishers might see it as crass or cannibalistic. But, those who can make the transition almost always see enormous rewards for doing so.
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