In another life, I worked for a company that studied how things work in various cities and regions of the world. Corporate America pays a lot of money for this kind of information, and the job taught me much about, well, how things work — especially beneath the surface. On one of these projects in a midwestern state, I met an old labor guy with a great deal of wisdom. He said something that stuck with me. "The simple truth," he said, "is that resources are always limited, and progress always means whacking somebody else's fatted calf."
The fatted calf of the mainstream media is under a severe whack attack these days. The battlefield is the World Wide Web, and beneath the surface, it's producing an ongoing economic drama of biblical proportions.
In discussing issues relative to the communications revolution that was taking place on his watch, FCC Chairman Michael Powell made this remarkable statement:
I have no problem if a venerable institution disappears tomorrow, as long as that value is distributed elsewhere in the economy.
The idea of value being distributed elsewhere is the whacking stick in today's media revolution, and it's something that should be of concern to everybody. The value of information is the issue, because that value is being redistributed away from media companies and back into the pockets of people who used to spend it on books, newspapers, magazines, Internet subscriptions, cable and many forms of self help and education. Institutional, top-down media had their cake and could eat it too in a passive, mass marketing world. That's gone forever, and, as Sports Illustrated President John Squires told newspaper and magazine circulation types last fall, "Get over it."
Subscriber models aren't the only ones affected. Information is further devalued when advertisers refuse to pay existing rates for shrinking audiences, and that trend line continues to drift downward.
So if information has no value, then people shouldn't have to pay for it, right? This argument is as old as the Web, and it's being renewed in many circles in the wake of "long tail" theories about the value of permanent links to online content and even in discussions about the New York Times purchase of About.com. If better than half the people who ever read an article do so through search engines, the argument goes, then companies like the Times, where archives are stored behind paid walls, are shooting themselves in the foot. This is a vastly complex matter, and one for which there are no easy answers.
In an Online Journalism Review essay, Mark Glaser wrote:
Information wants to be free — as long as you don't have to pay the people who dug up that information. While the Net has long been associated with free things — free e-mail, free personal Web pages, free searches -- the news business has been repulsed by the notion that their hard-won scoops and journalism should be given away for free.
The Internet — with its Postmodern, deconstructionist architechture — makes it seem that all knowledge is "public" knowledge and all information is "public" information. It was built without a centralized command and control mechanism, and, therefore, the ability to tap unlimited databases is available to everybody. This is what makes Google so powerful. Absent any top-down structure, Google (anybody) is able to search and retrieve from those databases at any level, which, among other things, renders the portal Website concept irrelevant. It also makes attempts to block it appear odd and out-of-place.
The demand for this is significant. People who couldn't afford to pay for an education now find they're able to access for free the hidden knowledge that has helped others rise above them on the food chain, and the race is on to see who can move from have-not to have status faster. Human nature craves knowledge and information, so the wellspring for this energy is infinite.
Where knowledge and information isn't "public," people are stepping in to provide substitutes. Blogs are the best example of this. Craigslist is another, and so are a host of Wikis that are building a free database of knowledge. Even the copyright debates involving music, films and other forms of entertainment flow from this issue.
Everything's fine until we start talking about business and the idea of making money from knowledge and information. If a business is based on online knowledge and information, it's increasingly difficult to protect that knowledge and information, so that people will continue to pay for it. Attempts to do so have a way of backfiring in this era of breaking down the walls instead of going through the gates, because even if one is successful, the door is immediately opened for criticism and competition.
One part of the value argument is that institutional media forms want readers/users to visit their Web properties only in the form they were designed. Users are expected to follow the yellow brick road of Website navigation: home page/section/story/page2 of story/etc. Websites make money based on page views, and some people see deep links as a threat to their business model. Carolyn Little, editor of the Washington Post online says, "Coming in through the home page is an old model and coming in sideways is the new method of arrival for most users."
In Oklahoma, the Tulsa World is threatening legal action against blogger Michael Bates for the sin of quoting the paper's articles and linking to them in his blog. The newspaper knows that Bates has every right to do so under the fair use exception of copyright law, but it's going ahead with the threats anyway, prompting Dan Gillmor to write, "Earth to Tulsa World: Stop being so arrogant, and get a clue."
In the summer of 2004, Patrick Kenealy, the CEO of publisher IDG, got into a tiff with technology writers and bloggers over the issue of deep linking. IDG publishes InfoWorld, an important "voice" in the tech publishing world, and Kenealy didn't like it that writers — specifically those who were making money through advertising or subscriptions — were taking ideas from InfoWorld and linking to its articles. Kenealy felt the company should be compensated for that, so he used software from a company called eMeta to block inbound links. He was immediately vilified. The move ignited a firestorm of controversy from those who not only wanted access to his information but felt Kenealy was cutting off his nose to spite his face.
But Kenealy still defends the action, and says it's a matter of fairness. He notes that when IDG sought online rights from its providers, they boosted compensation by 25%. "We're both producers and consumers of content," he said, "and we want to be fair wherever we are on the value chain." Those linking to his content, he believes, don't have the same ethics.
"We've done everything," he says, "from taking our sites off search engines, to putting them behind walls, to putting some content behind payment walls." He has no intention of changing his mind, and he predicts he'll be justified by the future. "There's already a differentiation," he adds, "between branded and non-branded content." He predicts search engines will one day be based on specialities, and that Google won't be alone.
David Ades, Director of Strategic Initiatives with eMeta, says the line between giving away content for free and making it all paid or restricted is very broad, gray and blurry. eMeta, he says, is filling an important niche in the online publishing world, because "nobody else focuses on the complexities of monetizing content."
"If you lock down all of your content," he says, "you'll lose all of your users. However, if you start taking action to understand your users and give your users value in exchange for information they're giving you, you're not going to lose your users, because you're giving them something they want."
In today's contextual advertising world, users can add value to content by providing demographic information that publishers can use to serve targeted advertising. Where publishers want further tightening, Ades recommends doing it slowly. "The term 'lock down' brings to mind jail cells slamming," he notes. "It's more a decision to slowly tighten the leash on your content, to bring it closer to you and to understand your users. You only lock down the gold nuggets and the diamonds in the content, and for the gold dust, you measure it out. And you ask for something in exchange."
Ades adds that an important online metric is "value per user," but determining it is a vastly complex matter and different for each publisher.
If, for example, the penultimate value is influence, it would be wise to make the content free and permanent. Vanity Fair columnist Michael Wolfed noted in a speech at the 2005 SIIA Information Industry Summit in New York City that the Wall Street Journal has lost its position as THE major voice of influence, because it charges for online content.
I think the Journal felt that it was powerful enough to charge, and for a long time everyone regarded the Journal's activities online as the ultimate. They had unlocked the puzzle. In fact, I don't think they did. I think they locked themselves into a puzzle.
While the New York Times on the other hand became this ubiquitous information brand. It became finally the national information brand. And it did this, I think, because it was free.
There's a lot of talk these days about the Times charging for premium content and archives, and if that happens, we're likely to see another shift. Jay Rosen of PressThink recently noted that "if that happens and the Washington Post remains free, the paths of those two great news organizations will, I believe, diverge."
One of the most visible warriors in this free/paid debate has been the Encyclopaedia Britannica. During the Internet bubble days of 1999, the Britannica got a ton of recognition for the bold move of making its pages free to consumers online and adopting an advertising model. Tom Panelas, Director of Corporate Communications for Britannica, says they bought into the free information argument.
"The theory behind the model was traffic," he remembers. "If you could get enough traffic, you could make it work. We did that. We had 8-10 million unique visitors a month. We were doing all the things right, and it seemed to be working."
Then in 2000, the bottom dropped out of the market. Ad rates plummeted, and the Britannica's experiment stopped working. "Of the different aspects of our revenue model," Panelas says, "advertising was the most important ingredient, so when rates fell, it broke the model."
The company did extensive research and concluded that the advertising model wasn't sustainable, and that belief remains today. Panelas adds, "We believe that good quality, reliable information that is well-edited is somewhat rare and therefore valuable. People should be willing to pay for that."
The Britannica online boasts a couple of hundred thousand subscribers, according to Panelas, many of them coming through third-party bundling of products and services, something he believes we'll see a lot more of in the future.
The Britannica has weathered many storms in the last 15 years, as technology has rewritten their business. Even now, the online "Wikipedia" — which is written and edited by the public — poses a new threat, but the company has faith in its model. "This stuff is constantly changing," Panelas admits, "and the way customers understand this is changing all the time."
He's quick to add, however, that "we live in a society that's too sophisticated to completely abandon empirical and rational thinking."
In a Postmodern world, such assumptions can be dangerous, and this is what's at the heart of the free-versus-paid argument. The rational Modernist world is the one with the institutional doorways and permission gates, but that world is fading, and our culture is rapidly moving in a different direction. It's a "new wine" thing, and it requires new wineskins.
We're at a point in history where media companies must rethink basic assumptions and assign new values to everything. Top-down business models have served us well, but the market is now bottom-up. How can our value assumptions today be altered to meet the bottom line of tomorrow?
For example, if a broadcaster is getting a $200 CPM for a 30-second spot, it might be wise to ask if that 30 second spot would have more value to the company if it was used otherwise — perhaps promoting another profit-making business owned by the station (or the station's owner). Our obsession with the formulas of the past blind us to the possibilities of the future.
Time has value, and it's high on the list for Postmoderns (Pomos). They don't want to give it away like they were forced to do in a media world of passive participation. If they don't want to give us their time, what WILL they give us? We ought to ask them.
The revenue models of tomorrow will likely be quite different than they are today, and nobody has all the answers just yet. Value is value, however, and we ought to be spending more time studying what people are prepared to give us, as we attempt to meet their information and entertainment needs, rather than working overtime to raise old revenue models from the dead.
The fatted calf of today is tomorrow's steak and french fries. Let's shift our thinking and enjoy the meal.