Free is Not a Business Model

“Free” is an attention grabber, not a business model.   Chris Anderson, author of the recently introduced book, Free! The Future of a Radical Price , understands the power of the word “free” on many levels (including using it as a catchy title).  But even he can’t justify giving away intellectual property as a business model.  Rather, he frequently recommends a “freemium” model, where some content is widely available for free with revenue coming from upselling leads.

I wrote my last article on the commoditization of health content, before the release of  Anderson’s book.  While I agree with most of his points—especially the fact that digitized content is subject to commoditization because of low marginal costs – it’s important to keep in mind that Anderson and others are only talking about a part of the picture.  Digital content and digital distribution may drive down prices over time, but they also increase the options available for packaging content for different audiences and applications.  So, while the basic bits may be commoditized, helping customers apply those bits to solve problems, close sales, or become more efficient remains a very valuable service. 

There is a range of options available to publishers to differentiate their content in the marketplace to retain value.  The best mix of free content, premium content, tools, subsidies, and value-added services will differ depending on the nature of the content and the size of the potential audience.  Very specialized content with a limited audience may do better with a premium subscription model; news content with mass appeal may be better suited to an ad-supported free-to-the-reader model.  In both cases, some content may be used for marketing purposes to attract and retain users.

To thrive in the digital economy, publishers need to rethink how their users value the information they provide.  What do these users do with the content?  What can you do to help these users become more productive or work more efficiently?  This is the essence of infocommerce, and many publishers still have not harnessed its full potential. Some are still stuck in the old mindset that they produce “textbooks” or “newspapers” or “journals”. Instead, they should be thinking about how their content can be integrated with software to offer decision-support systems, or how their content could be used by an online marketer to shorten the sales cycle.  

In the past week, infocommerce has been the subject on Andrew Savikas’s blog at TOC at O’Reilly Publishing - Content as a Service and  Matt Dickman, a digital marketer at Fleishman-Hillard  -  Content as  Commerce  . Both  stretch their ideas a bit too far in order to make their point, but they represent creative thinking about how to readjust the way we view the value of content.

Another phrase should be added to the discussion:  “Content as Advertising”.  Publishers need to gain a renewed understanding of their advertisers’ needs and consider how content can be used as a vehicle to engage prospects.  Using free content to attract leads and build brand equity isn’t all that radical if one looks at how this “content as advertising” is supporting (and in some cases supplanting) traditional branding and lead-generation methods.  We predict that as “content as advertising” and “content as commerce” continue to evolve,  the lines between publishers and marketers will blur as marketers learn new methods for using content online to attract new customers. 

[Note, although not specifically focused on health content, this article is particularly relevant to pharmaceutical marketers and OTC health and beauty marketers.]