Feb 07 2008
The value of free
So … local news journalists will soon (if they have not already) find more readership through aggregators and search than they do through their own sites, papers and stations. [See related earlier posts.] Change is good, and as always, change requires new business models. As the transformation of media accelerates, interesting issues arise, some of which are we’ve seen before, related to music distribution on the internet. Chris Anderson, the author of The Long Tail, is writing his next book on “free” business models. The conversation is crucial to the future of … more than just media. If you haven’t seen the discussion on Anderson’s blog, check it out. Here’s a recent post with lots of interesting comments. Here’s another.
Economic theory of ‘pure’ markets breaks down when one realizes that information is not ‘free’. This manifests itself in ways that are obvious everywhere, but not necessarily perceived in the language of economic thought.
The web has certainly reduced the cost of information greatly - resulting economic efficiencies may be its own reward. With progress, old businesses do go under, that’s a fact of life. To some extent this will happen with journalism, depending on its ability to reinvent itself, the subject of this thread.
I think the pieces of this reinvention are already known - what is not known is who will put them together and sell them. One hard fact that many ‘journalists’ are in denial about is that user generated content, CAN be better than anything they themselves can draft. The key with this of course is the ‘editorial’ ability to sort the wheat from the chaff - google link counts are useful in this regard, but are not the complete solution.
My opinion is that there are two existing business models to compete with and that these will lead to the best solution.
First is the yellow pages. No one has yet created a local or national substitute for this product, though there are exceptions within niche markets.
Second is cable tv revenue. FWIW I don’t think paying $40-50 a month for additional channels of advertise bearing content is a good deal. (though the Daily Show and Colbert do come close). Many households will spend in excess of $100 per month for a variety of channels, mostly sports and movies. A smart, non-cable, operator of internet services can capture, and hold, this revenue by providing a framework of services adding value to the google link asset.
Affiliate revenue from journalist created content will be one of these streams. Perhaps more importantly though will be published items from professionals themselves - the typical ‘guest’ editorial in a local business page is a model that will go far - especially if the publisher can generate a small stream of referral revenue from a consumated relationship - commercial or residential.
The big wild card though is the consumer him, or her, self. They want to be part of the process too. The people who can play that wild card will be the winners.
I think that is a fairly safe bet.