By paulgillin | May 30, 2008 - 9:03 am - Posted in BusinessModel, NewMedia, Solutions

Tim Lee writes in the Atlantic about the creeping economy of free. Content providers will increasingly find themselves under pressure from competitors who offer similar information at little or no cost. The challenge is to develop new business models around ancillary services. Chris Anderson of The Long Tail fame is big on this topic right now. Anyone involved in the media business should read his recent article in Wired about how the perceived value of content is moving toward its marginal cost, which is zero. That’s a problem for publishers whose business models are based upon charging for content. In Anderson’s view, content will quickly become free and content providers must find scarce resources to monetize, in the same way that book authors make most of their money from speaking gigs.


Steve Outing, whose April Editor & Publisher column about canceling his newspaper subscription elicited howls of outrage from readers, comes back with a more constructive prescription for newspaper reinvention.  The gist of it is that newspapers need to deliver higher value services and charge for then, including services delivered entirely online or by e-mail.  People will pay for these products if it saves them time and provides value.

As provocative as Outing’s April column was, this one left us feeling a bit empty.  If you subscribe to the theory that information value is constantly attacked from below, then investing a lot of money in delivering a really cool paid online product seems very risky.  The idea of increasing prices for the print version is more interesting.  Magazine publishers seem to have the flexibility to adjust their cover prices based upon the perceived value of the content and many do quite well at that.  Newspapers, on the other hand, raise prices only reluctantly and always cite factors like increased costs rather than value to the reader.  Why do newspaper publishers debase the value of their products in this way?  Is there a possibility of turning around that thinking and asking customers to instead pay more for a better product?

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