‘Should’ Is Not a Business Model

I’m firmly in the camp that believes pay models will work only for a tiny percentage of Web content produced by media companies. This means I’m part of a group often derided as idealists who believe “content wants to be free” and are utterly naive about basic business principles. It’s a weak, inaccurate stereotype. I’ve been on the digital side for 14 years, and I don’t think I’ve ever heard anyone utter the words “content wants to be free.” I believe in free content not because of some earthy ideal, but because I understand the basic business principle of supply and demand. There’s more content available to news consumers now than at any other time in human history, and much of that comes in the form of commoditized news. The power of individual news brands is weakening in the face of massive disaggregation of content and the growing power of social networks. I believe in the free model because I don’t think readers will pay for 95 percent of what news organizations currently produce.

I was thinking about this while reading TheWrap’s report on Tuesday’s Magazine Innovation Summit in New York. Here are some of the quotes about pay models made by participants at that event:

• Reed Hastings, the founder of Netflix: “[Pay models are] certainly worth a shot.”
• Ken Auletta, New Yorker writer: “There’s a growing recognition that free is not the answer.”
• John Squires, Time Inc.’s executive vice president: “In the end you have to have guts to say I’m not going to give content away for free.”

Comments like these are typical of those made by pay model advocates. Instead of answering the very debatable question about whether people will pay for content, these comments merely imply that they should. Since when do we build business models based on what consumers should do? Yet, on a daily basis, you see comments from media executives saying that what they do has value and/or costs a lot to produce, so asking to be paid for it is only fair. Sure, I suppose content would have value to you if you were the executive running the unit that produced it. But that’s an altogether different question than whether the consumer thinks it has value. Yes, it costs a lot of money to produce quality enterprise and investigative journalism, and yes, you have to find a way to recoup those costs in order to have a viable business. But, last I checked, network programming cost a lot of money too, but the medium that delivers that content remains free. Just because something costs a lot of money to create doesn’t mean direct reimbursement is the only road to fiscal stability.

In the end, there won’t be one silver bullet that magically creates viable Web media businesses. It’s going to be shrapnel, little bits of revenue from many sources — one of which, by the way, will be quality, niche premium content. But we should be wary of any business model predicated on what we think our content is worth.