One of the earlier realizations I had about handling content on the site was that if content can be digitized, the upsides of offering free digital copies far outweighed the downsides of not monetizing digital copies. Just the idea of trying to lock up the content seemed counter-productive to building an audience, if not outright impossible (look at the music industry’s failing struggle to find a way to offer audio files on their terms in a manner that doesn’t anger or inconvenience its customers).
I didn’t come up with this idea on my own, but I quickly became comfortable with the concept that giving away free content was not totally insane. It was hard to ignore what was happening to newspapers, the recording industry, and any other producer/distributor of digital content. Did I want to gin up some revenue by charging for .pdf downloads or for monthly membership access? Did I want to follow the footsteps large media companies who had far more money than I but still couldn’t make their online content models work?
Now, this realization was back in mid-2007, and I’ve been happy to see more and more examples of content being offered digitally as a marketing strategy so that the attention garnered from the free content can be monetized by presenting users with traditional offerings (printed books, t-shirts, etc.).
Chris Anderson’s Wired article from early 2008 distilled this idea, and Mike Masnick at Techdirt continues to highlight example after example after example of content producers who understand the changing nature of (digital) content and the implications of those changes on how to monetize the content.
The short answer is that rather than trying to monetize digital content directly (e.g., charge a fee just to view the content online), producers should use the digital content to accrue attention/users, at which point, non-digital goods can be sold to them. Digital content is now advertising/marketing, not a product, and the revenue becomes possible by leveraging an infinite good (the digital content) into a scarce good (the traditional/analog/physical products or services). [see also Cory Doctorow’s article about the using the Internet’s inherent nature to your advantage rather than viewing it as something to overcome and why he gives away free digital versions of his novels]
In a somewhat counter-intuitive manner, recent attempts and growing data indicate that revenue from scarce goods can actually grow if the infinite goods are literally given away. Several writers and musicians have found that the increased exposure of their content, when given away digitally for free, offsets the loss of sales by having people only consuming the free digital version of their content (Cory Doctorow and Charles Stross, for example).
Rather than fight the tidal sea change of free content we saw coming, we decided to try and ride it.
Up next: Part 7 – What’s In a Name?