SCN: Free information

[Steve]

x-no-archive: yes     

==========================     


Information has been free all along. It's the Internet that wants to 
enslave it.       

(Michael Kinsley, Slate)---The first great cliche of the Internet, carbon-
 dated back to the mid-1990s, was "information wants to be free." 
The notion, purged of poetry, was that no one should have to pay for 
"content" - words and pictures and stuff like that - and, in the friction- 
free world of cyberspace, no one would have to.       

Today, following last year's Great Internet Disillusion, people no 
longer care what information wants. Information can go inform itself, 
because information providers want to get paid. Investors are 
suddenly asking for some plausible theory of how and when a Web 
site might be expected to make money.   

And meanwhile, the two most popular answers to those questions - 
a) advertising; and b) don't bother us about that now, can't you see 
we're busy? - are met with increasingly impolite skepticism. "You're 
fired" is how many skeptics now analyze the situation.       

The reigning notion today is that the laws of economics are not, after 
all, suspended in cyberspace like the laws of gravity in outer space. 
Content needs to be paid for on the Web just as in any other 
medium. And it probably has to be paid for the same way most other 
things are paid for: by the people who use it.      

We tried charging the customers at Slate. It didn't work. Future 
experiments may be more successful, and we at Slate encourage 
others to jump in. We'll watch. But meanwhile, let's look again at 
this notion that in every medium except the Internet people pay for 
the content they consume. It's not really true.       

Television is the most obvious case. A few weeks ago a producer 
from Nightline contacted Slate while researching a possible show on 
the crisis of content on the Internet. He wanted to know how on earth 
we could ever be a going business if we gave away our content for 
free. I asked how many people pay to watch Nightline. Answer: none. 
 
People pay for their cable or satellite hookup, and they pay for 
content on HBO, but Nightline and other broadcast programs thrive 
without a penny directly from viewers. There are plenty of 
differences, of course, and the ability of Web sites to support 
themselves on advertising is unproved. But Nightline itself 
disproves the notion that giving away content is inherently suicidal.  
 
Now, consider newspapers. Customers do pay, but they're not really 
paying for the news: They're paying for the paper. Newsprint (which 
is the paper, not the ink) currently costs around $600 per metric ton. 
That's about 27 cents a pound. A weekday edition of the Washington 
Post weighs about a pound and costs 25 cents.      

Not every paper is as weighty as the Post. But a recent article in 
Presstime, the house organ of the American Association of 
Newspapers, reported that a typical newspaper gets about 22 
percent of its revenues from readers, while spending 12 percent on 
paper and ink, 6 percent on running the presses, and 13 percent on 
delivery and distribution.       

That's every penny the newspaper gets from its readers plus 
another 9 percent of its revenue going to expenses that virtually 
disappear on the Web. Giving up that revenue in exchange for 
losing those expenses looks like a great way to make money.      

Once again, no one has managed to make that deal yet (though the 
Wall Street Journal web edition is reportedly close). But distributing 
the news for free on the Internet does not seem inherently more 
absurd than chopping down trees, hauling huge rolls of newsprint 
across continents, running vast presses, and dispatching a fleet of 
trucks at the crack of dawn in order to get 25 cents for the same 
words and pictures on 27 cents' worth of paper.       

Finally, look at magazines. And forget about the cost of paper: The 
money that magazine subscribers pay often doesn't even cover the 
cost of persuading them to subscribe. A glossy monthly will happily 
send out $20 of junk mail - sometimes far more - to find one 
subscriber who will pay $12 or $15 for a year's subscription. Why? 
Partly in the hope that she or he will renew again and again until 
these costs (plus the cost of actually producing and sending the 
magazine) are covered.      

But for many magazines - including profitable ones - the average 
subscriber never pays back the cost of finding, signing, and keeping 
him or her. The magazines need these subscribers in order to sell 
advertising.       

Most leading print magazines would happily send you their product 
for free if they had any way of knowing (and proving to advertisers) 
that you read it. Advertisers figure, reasonably, that folks who pay 
for a magazine are more likely to read it, and maybe see their ad, 
than those who don't. So magazines make you pay, even if it costs 
them more than they get from you.       

This madcap logic doesn't apply on the Internet, where advertisers 
only pay for ads that have definitely appeared in front of someone's 
"eyeballs." They can even know exactly how many people have 
clicked on their ads. So far, advertisers have been insufficiently 
grateful for this advantage. But whether they ultimately come around 
or not, there will never be a need on the Internet to make you pay 
just to prove that you're willing.       

So maybe the Internet's first great cliche had it exactly backward: 
Information has been free all along. It's the Internet that wants to 
enslave it.       


Copyright 2001 Slate.com     




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