As a follow-up to my post from yesterday about the UK launch of Chris Anderson's new book Free, I thought I'd share thoughts from the panelists: Stefano Hatfield, editor of thelondonpaper; Paul Brown, the UK MD of Spotify; and Rory Sutherland, Vice-Chairman of Ogilvy Group UK. All comments below are paraphrased.
MediaWeek: Who is making money out of "free"?
Brown: The general thought about music is that advertising is not the panacea. Radio has done very well with the free model. Pandora is projecting a turnover of $40 million this year. Licensing costs are high but there are successful free business models where there are paid and free elements. "Free" is a very powerful way of generating profit from high margin products. Spotify is only four months old but revenue is doubling month on month.
MediaWeek: How are free newspapers affecting consumers? Is the work of traditional journalists in jeopardy?
Hatfield: In the past three years, several jobs have been created at thelondonpaper and London Lite. But there aren't as many journalist jobs on each title. The Metro has about 100 people on staff. Fleet Street is going to have less journalists. It's a more dynamic and fast-moving process. When Michael Jackson died we did 24 pages in two hours.You have to be more creative when you can't spend 10 million pounds on a Madonna photo.
MediaWeek:Is there a down side to the "free" business model?
Sutherland: Jeremy Bullmore said some of the worst successful products in the world survived because they were free -- the metal coat hanger and the warm-air hand dryer. The end user had no say in it. White wine that is free is invariably worse than wine that you choose.
Other comments:
- Free is not merely an extension of cheap.(Sutherland)
- Every time Craigslist makes a few cents, a few newspapers in Alabama go bust. (Sutherland)
- Volunteers do better than conscripts (employees), because they are passionate. (Anderson)
- Avocations were previously done privately, for free. Now they are done publicly. (Anderson)
- In the old days, "nutter letters" didn't get published. Now they do. They're called blogs. (Hatfield)
- A little bit of transaction (e.g. charging even one cent) places an amazing amount of friction.
- Once you're free, no one can undercut you.
- If something is born free and remains free, like Google, we don't think less of it. But the same doesn't hold true for things that become free, like The Village Voice. (Anderson)
Related Posts:
Free thoughts - the UK launch of Chris Anderson's new book
Digital serfdom: I want my UGC (an argument for fair compensation of content creators)
Trendy spotting: Spotify
Affiliate Links:
Free: The Future of a Radical Price
Long Tail, The Revised and Updated Edition: Why the Future of Business is Selling Less of More
