Enough Free Content

I produce a fair amount of content, and I give most of it away for free. I’m writing a book, and although the book costs money, it’s basically free (~$16 for the hard cover and ~$10 for the e-book); priced so low that it really shouldn’t be an issue for people. Plus it took over a year to write. And you don’t make any money from books (unless you sell an absolute shit ton of them).

People produce free content (published books included) to get people to buy other things from them or build a platform for themselves. That’s the crux of content marketing. Attract people with free content, monetize them in another way.

That’s what most magazines, newspapers and other content publishers do as well (online or in print). They produce content in the hopes of building a massive, loyal audience and then they monetize in other ways. Usually it’s advertising, which basically means they sell the hell out of their audience.

The audience is the product.

Advertising makes the Internet go-round, but I think enough is enough. Content publishers shouldn’t create content in order to sell the audience. They should create content to sell content.

The content should be the product.

If you want to make money from the content business, you should try charging for the content. It’s the fastest way to know if anyone gives a shit. If they don’t, they won’t pay. If they do, I’m betting they’ll pay. Not many of them, but the fact is that even in a Software-as-a-Service business or e-commerce business conversions are low–1-3% from free users or passersby to paying customers. Could you get 1-3% conversion on a content business, charging a subscription?

In order to make advertising work you need millions and millions and millions of page views. There’s no other way. Advertising rates are so low online, and I don’t think they’re going up. Let’s say you can get $5 CPM (which means $5 for every 1,000 page views) with an online ad unit. If you get 1,000,000 page views/month, you’re earning $5,000/month in revenue. (1,000,000 / 1,000 * $5) That’s not very exciting.

Instead, you could earn $5,000/month in revenue by finding 1,000 people willing to pay $5/user/month.

Which model would you prefer?

The Internet is a big place. If there aren’t 1,000 people interested in what you’re doing that are willing to spend $60/year, you really have to question what you’re doing.

We’re seeing content publishers experiment more frequently with the subscription model (and others, like paywalls). Marco Arment’s The Magazine is a good example. It costs $1.99/month and there are no ads. I’m not sure the issue approach is necessary (putting out issues at certain time intervals), but nevertheless, The Magazine is popular. And there are others. But many of the entrepreneurs I speak with that are in the content / media space still fall back on advertising as their core business model.

I think the answer to hyperlocal is also in subscriptions. People are interested in hyperlocal content (particularly in specific niches) but online advertising won’t work well enough. A small startup tackling a hyperlocal niche is not going to have the expertise or time to produce great content and hunt down advertisers (especially when advertisers are going to spend $20 for an ad). AllNovaScotia.com is a hyperlocal online business that provides business-centric content on a daily basis. It’s 100% behind a paywall. They have a very simple website and mobile application. That’s it. And it’s not cheap–about $30/month (with taxes). But it works. They’ve got thousands of subscribers. They provide a service that no one else does (the newspaper has business news, but not as much as what AllNovaScotia offers). AllNovaScotia isn’t a billion dollar company, but from what I hear they were profitable in their first year of operation and haven’t looked back.

Free content has its place. If you’re building your brand, trying to attract customers, demonstrating expertise or developing a platform from which you want to launch other things, then content marketing can work wonders. It’s not free to produce, but no one’s stopping you from publishing on the Web. And that’s awesome. But if you’re in the content / media business you need to look at alternative business models to advertising. As everything moves online and advertising rates stay flat (plus supply goes up), you have to look at subscriptions, paywalls and other revenue models that basically say, “If you like this content and want it, you have to pay for it. End of story.”

March 3, 2013 Posted in Business by

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  • Bruno

    Couldn’t agree more. I have a strong preference for models where my users are also my customers and vice-versa.

    That being said, it’s a model we’re more used to see with applications, not content. Even in pre-Internet times, most content businesses had business models relying on ads either in whole or in part. When there’s so much “good enough” content available for free or very cheap, you need to have very unique content to be able to charge good money for it. Your example of hyperlocal content is a good one but what else?

    Do you consider your book to be an example of “looking at subscription paywalls or other revenue models”? To me, it’s definitely not. If it wasn’t for the fact that you and Alistair built a strong reputation and following by producing a healthy flow of high-quality content for free, sales of your book wouldn’t be the same. That’s more like a typical freemium model for both of you (and there’s nothing wrong with that, au contraire)

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    I see the book as basically free. Sure it costs $20 or so ($10 for the e-book) but that’s so inexpensive compared to the work put into it. Plus we see very little of that — and as most authors know, you don’t make money from books, you make money from what else you do after the book (consulting, workshops, etc.).

    I *am* hoping to experiment with some subscription based content things too (if I can find the time to do so), but that’ll come after the book.

    In terms of where there’s value in content – I think part of it is aggregation: taking disparate sources of content (that I could find, but I’m too lazy to) and sending it to me. There’s value in that sort of effort: curation, verification and aggregation.

  • http://blogging.cwl.cc/ Kevin Costain

    You view is very interesting, and it makes sense. Though I tend to wonder if “free” content may a dubious idea. Clearly content is close to impossible to create free, but it is also true that content is impossible to consume free?

    Consider what it might “cost” to read this:
    1. A computing device of some sort (if not in a library) that we’ve had to pay money for
    2. An Internet connection (we include the price of food/drinks if in a coffee shop)
    3. Electricity Utility charges (if we don’t all go to the library to charge our devices)

    I would think that, if I had no access to any (or all) of those three things, that I’d not be able to read much of the content that exists online for “free”. I’m reading one quarter of the world alone has no access to electricity. I would imagine those people think “free” web content is very expensive.

    Saying that, it seems we all pay something for the benefit that comes from interesting and useful content. Certainly more for that content behind a paywall, but shouldn’t more of the content we create be closer to free?

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    I don’t buy the “it costs money to consume” argument, although it’s an interesting one. You have a choice – consume content or don’t. If you don’t have electricity or an Internet connection, you have bigger fish to fry, I’m not sure you’re worried about free content online at the moment.

    Why should content be free? Because there’s a barrier to entry (albeit one that’s dropping all the time) in order to access it? I’d say that’s the case with most things, and most things we consume are not free. Creators of content should be paid for their work; assuming anyone cares. If no one cares, then they fail, like anyone else that tries something.

  • http://blogging.cwl.cc/ Kevin Costain

    Whether you agree with it or not, those of us in developed countries benefit from the ability to buy our way into consuming content. My argument isn’t that it costs too much, it’s that it has a cost. This cost is valid, just as the cost of creating the content is valid. Not including this in the conversation seems to limit the bigger picture. (Edit: .. and I’m not saying your are doing that, by the way).

    Should those who create content be paid for it? Certainly. Possibly a more appropriate question could be: Should those who create content be motivated by profit?

    The “bigger fish to fry” is exactly the point. Those of us with plenty, watch as those who have little, are kept from the benefits of consuming content: learning and gaining knowledge. There many many that consider this a human right.

    There are, sadly, people I know in poorer countries, that don’t even know the wealth of knowledge that is shared every second of every day. The choice isn’t even a choice. Those of us in the first world seem to easily exclude those elsewhere because it seems far from us.

    The idea of a world where nothing enters the public domain, everyone is paid top dollar for all the content they create and those who choose to learn, can’t because of economics – is not a place I would like. After all, I think one of the most value things I can offer anyone is passing on what I’ve learned. Isn’t that how we got here (industry, computers, Internet) in the first place?

  • http://twitter.com/kimbetech Kimberly Simonton

    I agree completely. There is tons of free content out there, but frankly most of it is not actionable or helpful alone. That is why there are books and seminars from those books that you can now do online, remotely with mobile, etc. Media Bistro is a good example of this, a service that served a purpose for me for a bit and I was happy to pay for it. Please experiment. I look forward to it!

  • http://twitter.com/neilnoakes neil noakes

    I’ve been thinking about this recently too, sparked largely from the ADN ‘movement’ and subsequent free tier. I wonder what would happen if Facebook, Twitter or Instagram charged for access. Would you pay and what for?

    The net has conditioned us to expect something for nothing. Industries have broken apart and are being rebuilt e.g. Music which is becoming increasingly commoditised through freemium subscription services like Spotify. A recent post by a journalist voices concerns along these lines in relation to the publishing industry: http://natethayer.wordpress.com/2013/03/04/a-day-in-the-life-of-a-freelance-journalist-2013/

    It’s no different to other industries in that someone is always going to offer something equivalent for cheaper, possibly free.

    Thanks for the hyperlocal example. A hypothesis I have is that increasingly net audiences will gravitate towards these niche networks as a representation of their values and interests. It’s like joining a sports or hobbyist club. Values can be a strong enough differentiator worthy of payment. Reminds me of this quote “…If two competitors spend equal amounts on production, the one whose ideals resonate with the target market is the more valuable.
    Your values are a competitive advantage…” from http://www.fastcodesign.com/1671910/the-12-trends-that-will-rule-products-in-2013

  • http://www.yepiclip.com/ yepi

    I have been through the whole content of this blog which is very informative and knowledgeable stuff, I would like to visit again.

  • http://www.yepiclip.com/ yepi

    Very impressive article. I have read each and every point and found it very interesting

  • http://www.yepi-yepi.com/ Yepi Friv

    I totally agree with you that Free content has its place. Free them and you will have what you want

  • http://www.yepi8.org/ yepi8

    thanks, very good article

  • molasses jones

    totally agree.

  • molasses jones

    I care… let @Oprah give out content for free or any one else in business who’s making any money. I’ve personally decided that my content costs (period)

  • Mash Bonigala

    Nice article Ben. However, I must question what you said about wondering if you are doing the right thing if you can not find 1000 people willing to spend $60/year. I mean, even if you had the best thing going, it may be mighty difficult to find a 1000 people willing to pay for it simply because you may not know how to reach and convert those 1000 people.

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  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    If you’ve got “the best thing going” why would it be hard to find 1,000 people willing to pay? There are lots of channels to users that you can test, and there’s virality as well as word-of-mouth (again if what you have is awesome, people should share it).

  • Mash Bonigala

    I suppose, having the best thing and marketing in a tough environment are two different things. Yes, word of mouth would work but has its own limitations both in terms of time scales and virality. One needs to understand how to use these different channels effectively which is not always the case. It is tough getting to grips with marketing and hence you have so many people with a great thing going but not enough business to show for it.

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Marketing is definitely hard. Finding the right channels is hard. But I’d rather go searching for those with a paying product rather than a free product, since at least you can recoup some investment on the marketing front…

    Free is a marketing tactic though, and freemium can work for certain software businesses. This article is specifically about content though, and the need, in my opinion, to start charging for the content you produce vs. giving it all away.

Ben Yoskovitz
I'm VP Product at GoInstant (acq. by Salesforce).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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