Monday, July 20, 2009

Damn Yuppies

Yesterday, Deborah Solomon interviewed Chris Anderson, editor of Wired magazine and the author of a new book called Free: The Future of a Radical Price. I haven't read the book, but Anderson, like many cheerleaders of web culture, seems to think it's unfathomable that people would be charged for content online. Here's one exchange with Solomon:
Several critics have already pointed out flaws in your argument, citing YouTube as an example of a mass sensation that is losing enormous sums of money.

YouTube is owned by Google and today loses money. But Google has achieved something extraordinary, which is a network-television-size audience. The problem with YouTube is not that it costs too much to deliver that video but that we have not found a way to migrate television advertising as quickly as the television audience has migrated.
Three problems here: 1) What if advertising never fully migrates?; 2) Even if it does, unlike network TV, the web's audience is collectively massive and individually diffuse and harder to reach in any one place; and 3) Aren't there many, many examples of media that have advertising and still charge for content? If Anderson is basically saying that everything should be like CBS or the Village Voice, then I want off the island now. Another excerpt:
Why not just sell subscriptions, as in the HBO model, which proves that people are willing to pay for quality?

The original concept of the information superhighway from the early ’90s was going to be exactly that. We’re now 15 years past that, and the marketplace has spoken. The marketplace wants free. Consumers want free, and if you decide to set up a subscription service, then your competitor will make a free one.
"Consumers want free." To quote myself from childhood: "No duh." Of course consumers want free. I'm one of them. But I also think certain outlets are really, really dumb to give me free. A place the size of the New York Times has substantial costs that go into making its product. These costs have always been partly met through advertising. But the other part is charging people for the product.

Why this market philosophy should fundamentally change because something goes online makes no sense to me. Never has. And there is no doubt in my mind what a stubborn refusal to pay for things online will mean, over time: Less good stuff online. The Times, as well as any site you enjoy that requires resources . . . forget 'em. They won't exist. The primary problem with depending on advertising -- especially for places like the Times, which needs a lot of it -- is that advertising can be cheaper or free online, too. (See Craigslist and how it decimated publications that depended on classified ads.)

But here's where Solomon nails it, I think.
I wonder if all this is rooted in yuppie entitlement. What’s disturbing is that no one wants to pay for anything anymore, which is why we’re in the midst of an economic meltdown.

You do see a generation going online expecting things to be free, from their Facebook pages to their music downloads to their video games. I don’t think that’s driven by entitlement but by an innate understanding of the digital market.
I repeat, I haven't read Anderson's book. But it seems to me that this "innate understanding of the digital market" is nonsense. What they maybe understand is that they can get a lot of things for free online, but no one understands how to make free stuff...profitable. Facebook, YouTube, you name it -- have you heard any convincing way they can make (enough) money using their current model? That's why the Times is seriously considering a subscription model, and I hope it succeeds. Given how much I read the Times online (pretty much exclusively at this point), charging me for it is the only sensible thing to do. I would gladly pay. Either way, I'm pretty sure that the time will come when there's a choice: Pay for it or wave goodbye to it.


Blogger Kraig Smith said...

Ha. The girl I'm dating just spoke on a Media Bistro panel about this very subject---which is why I couldn't go to your happy hour event.

Here's the bad news: Nobody has a solution.

Here's the good news: At least nobody has positively concluded there is NOT a solution.

Seriously. Entitlement is a major impediment to finding a successful business model. It's like taxes. Once you cut taxes, even if you want to raise them back to recent levels just to provide some basic services, forget about it. You want to raise my taxes? You want me to pay for content? Forget it.

It's going to get worse before it gets better.

7:15 PM  
Anonymous philosoraptor said...

Nice. Malcolm Gladwell reviewed Anderson's book in a recent issue of the New Yorker. My sense is that the two of you are in agreement about the strength of Anderson's argument (minus whatever differences will become apparent after you've actually read the book...)
You and he now need to go on the road with a tag-team critique!

11:11 AM  
Blogger Nathan said...

Perhaps to satisfy the yuppie sense of entitlement, Anderson has made Free available for download for free. The Consumerist has the story and links.

3:11 PM  

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