Excellent overview of Anderson’s book. It seems Schmidt might be right about needing to have the biggest possible reach to make any money with free – at least at the Fortune 500 level. Indeed, you allude to a notion that (at least to me) seemed equally felt by most of our classmates, that Anderson’s ‘free’ models are not effective enough for everyone that’s not Google, or do not provide enough answers for every business across the scale, big or small. This has been particularly demonstrated already by certain ‘old media’ industries like journalism and film/TV, where even the biggest players are “trading dollars for pennies” (see NBC’s Jerry Zucker). On the other hand, the long-tail seems to be providing substantive profits for certain niches – consider the West Seattle Blog. That we should sound an alarm in the face of ‘free’ just because not everyone will profit from it, to me, is entirely missing the point. I say if you can’t make money providing a product or service, find a new line of work! The wisdom of the crowd and a robust information commons will adjudicate what’s “lost”.

I believe that each industry must approach “free” with different strategies, and they must continually test and innovate – or die. Software companies can look to the enterprise, for example. Nothing beats expertise. In the news field, heck, I love the idea of citizen journalism, too. I learn more from the people on the ground, and I realize that bias is inevitable. I look forward to ‘folk’ news, folk entertainment, and new ways of valuing knowledge (re: expertise and experience, not “googling”).

The findings of Chyi’s study on subscription based news services is not surprising. It has become painfully obvious that requiring a user to pay for news is not an economically viable model. As Anderson describes in Free, news, like almost all information in the digital age, will be consumed for free if there is the will and ability to do so, which there is usually plenty of both. The added complication to the news industry is that their content is a commodity. Unlike some magazines or other forms of specialized and niche content, differentiation between one news source and another is not great enough for most users to agree to pay. Where does this leave the newspaper industry? In very similar places its old media brethren, music and TV/movies, find themselves.

One aspect that makes the search for a viable free model tougher for news than it has been for TV/movies and music, is that news does not have the luxury of any built-in scarcity in its consumption. In Free, Anderson comments that the music industry will always have a scarcity of concerts to benefit from. There are a finite number of bands willing to play a finite number of dates for a limited capacity audience. Also, music has the benefit of being a very lifestyle-friendly medium, lending itself to merchandizing revenue. The movie business has similar benefits, although not as scarce as concerts, the experience of going to a movie theater to watch a film is difficult to fully replicate, although increasingly sophisticated home theater systems are putting that to the test.

What kind of model can news publishers find that will provide the differentiation or ancillary revenue needed to survive. Unfortunately, no one has created a successful model yet. Even more shockingly, with all of the evidence to the contrary, organizations such as News Corp or going to try and put Pandora back in its box and begin charging for access again. It will not work unless they can provide a tremendous amount of enhanced value to the user. As Chyi and Anderson have shown, getting consumers to fight through the mental transaction cost of paying for content is a difficult proposition.

Good, get with the times fascists!

Good posts as always, this topic really interests me because it just seems incredible to me that print media as a whole seems inevitably doomed. How will this continue to be a profitable business when the best thing they have to offer can usually be found for free online? And by trying the subscription method, all it really takes is one paying reader to post important info elsewhere to shoot holes in that idea.
I guess you can go the route of “hey it saves trees and the environment”.

The education also affects the participation on the Internet. We read a research before which said that the more a person use the Internet, the better he can utilize the Internet. The knowledge of how to utilize the Internet is crucial to the users.

Second, the electronic media has created what I call the danger of temporary accountability. Print media or even video or radio media has some level of permanence of the product and direct accountability to its author. However, with electronic media a post or website can just as easily be removed as posted, like trying to catch a greasy pig. In the electronic media world the word “fact” is often a term of art. So while information is instantly available to the entire populous, the value of that information is debatable and often requires research that most of us are unwilling to commit the time or energy to initiate.