Fee vs. Free in Tough Times

A year ago, the idea of free Web content was all the rage. Now the future of free is less clear. Andrew Keen, Silicon Valley author and entrepreneur, recently posted to a Wired blog that the economic downturn would strike a blow to free content.

 Fee vs. Free in Tough Times

“Although a lot of Americans are suddenly going to have a lot of extra time on their hands to donate their labor for free,” Mr. Keen wrote, “the idea of free labor will suddenly become profoundly unpalatable to someone faced with their house being repossessed.”

Mr. Keen went on to say that online media businesses that reward their contributors with cash would win out over those that are free to use—and pay contributors nothing: “It will mean the success of Knol over Wikipedia, Mahalo over Google and Hulu over YouTube.”

Those predictions are interesting in light of a September 2008 study by Rubicon Consulting. More than one-half of Internet users surveyed said they would pay $2 per month to use Google. No other currently free service was deemed as valuable.

Fee vs. Free in Tough Times

 

Mr. Keen’s use of Wired to post his thoughts was ironic since Chris Anderson, the magazine’s editor-in-chief, believes strongly that Web content will eventually all be free or close to it.

In an interview with eMarketer, Mr. Anderson said that the “free” economy based on services such as Google’s search engine is actually worth trillions of dollars. He said the other side of the free economy is that much of it never would have made money in the first place.

“Free is really near-zero marginal cost. But the reality is that a lot of it is never monetized at all,” he said. “It is free. The Web is free; what you’re paying for is peoples’ attention.”

Those who do charge for their content are finding out exactly what subscribers think it is worth.

More than one-third of paid-content Web publishers surveyed by MarketingSherpa at the end of April 2008 said they were already beginning to feel the effects of the economic downturn, and nearly one-quarter said that although they had not yet seen any drop in subscriptions, they expected to within the next six months—that is, right about now.

Via eMarketer

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