Finding A Better Business Model

- - The Future

Free is not a business model. Free is how you smash old crappy monopolies and how you force businesses who don’t give a rats ass what their consumers want to pay attention. Free is how you get some momentum so you can prove there really are better more efficient ways of doing some things. Thanks to YouTube I can now watch TV on my computer (Hulu) and a premium video streaming service exists (Vimeo).

Jason Pontin, Editor in Chief and Publisher of Technology Review delivers a brilliant manifesto with a plan to save media (here).

“For many decades, publications were overdistributed to readers who didn’t really want them, because publishers were former ad salesmen who hoped to profit by charging advertisers the highest possible rates.”

[...]“Editors can charge readers for content that is uniquely intelligent; that relies on proprietary data, investigation, or analysis; that helps readers with their jobs, investments, or personal consumption; or that is very expensively designed. Everything else should be available free…”

Chris Anderson, Editor of Wired has been working on a book about free that’s set to launch this summer (here), but I suspect he’s going to take a real thrashing on this one since it seems the tide has turned on free. All anyone is talking about these days is subscriptions, premium upgrades and advertising. All have free components to them it’s just not a big deal anymore. We know that if someone charges money for a product and you offer that same product for free you will attract more people. If you don’t have a way to make it profitable it’s called a trust fund not a business.

Here’s what the red hot Economist has to say on the matter:

“Ultimately, though, every business needs revenues—and advertising, it transpires, is not going to provide enough. Free content and services were a beguiling idea. But the lesson of two internet bubbles is that somebody somewhere is going to have to pick up the tab for lunch.” More (here).

And finally if you want read a fantastic analysis on the situation facing three largest business magazines all founded at the beginning of the modern era of magazines read 24/7 Wall Street’s: The Sun Sets On BusinessWeek, Forbes, And Fortune.

There Are 30 Comments On This Article.

  1. Maybe this type of media that people involved in advertisement isn’t needed anymore? Maybe advertisement as we know it has run its course? Yeah, I agree that one should be compensated for their work, especially if that work is creative and somewhat “artistic”. But really, why should I feel bad about all of these magazines going out of business? Lets face it, most magazines on the shelf promote unrealistic ideals and consumerist values. And straight greed. Advertising is just a small part of this, yes. However, it is part of it, and frankly I’m not sad to see it decline. Yeah it will happen anyway, because someone will step in when all the real creative people are screwed out of the game. I don’t want smart, creative people working in advertising. That’s the scary part to begin with, artists working with psychologists, all working for greed. What commercial photographers do, on a basic level, is trigger a psychological reaction in order to get someone to buy into greedy companies unneeded product. Most of these ads are already in magazines filled with culture destroying products and ideals. Celebrities, airbrushed models, fast cars, healthy women over 40 designed to make your mom feel bad and buy some new cream. fuck it, let the ship sink. Why not do it for free, it’s worthless for a vital society.

  2. The concept of “free” is the most misunderstood notion on the web; I find both the supporters and the critics fundamentally misunderstand what “freeconomics” is really about, and I think Anderson’s book will clear up the misconceptions and misapplications (or, at least I hope it will).

    This latest brushback against free is just part of the hype cycle, and I’m confident it will rear it’s head again in a couple years once we find a new bubble of businesses to fund through growth cycles.

    And the problem isn’t media, the problem is advertising.

    • @Taylor Davidson,

      I think for photography it is more a question of the complete dissociation now of the cost of production and the cost of reproduction/distribution. Photographs are not free to make; it takes investment to produce quality images. Yet once created and placed into the distribution channels the next cost of reproduction and distribution is near zero and the distributors don’t know or care about the production costs

      Anderson’s taxon of “Zero marginal cost” ignores that issue. http://bit.ly/rzryR

      Yet stock photographers struggle with it daily.

      • @david sanger, Yes, marginal costs are not zero: perhaps for the photographer, but not for the middleman; middleman don’t care (and shouldn’t care) about the up-front investment by photographers to create images, completely different incentive structures.

        The real struggle is the simple, fundamental changing of supply and demand for imagery; solve that and the business model is easy.

  3. I understand the logic and potential benefits of a subscription-based (0r micropayment) content model. I agree with much of it. But free is going to be a hard habit to break.

    I have to confess that any time a window pops up asking me to enter a credit card number, or provide personal information, to access content, I usually just move on. I don’t think logic alone will cause people to spend money on content just because it’s being fair to the creator of the information. There has to be more. There has to be significant perceived added value vs. the purveyors of free content. That’s a big challenge — and a big opportunity for some visionary editors.

  4. Clarence Yung

    If you want a preview of what the book’s probably going to talk about, read Chris’s cover story from a Wired issue last year:

    http://www.wired.com/techbiz/it/magazine/16-03/ff_free

    In the piece, he talks about all of the different free models — not just the free + advertising model — including the freemium model that you mention. I’m sure the book will be a good read, like the Long Tail.

  5. Hmm, I’d thought Anderson’s book already came and went Imagine he’s going back to the drawing board in light of recent events. ‘Course, that guarantees it’ll be a timeless classic. Here’s the Wired magazine version: http://www.wired.com/techbiz/it/magazine/16-03/ff_free. It did seem a bit ill-timed as everything went in the tank.

    The Economist is a great example of the countervailing trend. Last month’s Times had an article about magazines that are increasing their subscription price. Economist newsstand price is $7. $7 for a weekly! Yet, improbably, circulation is up 8.3%. http://www.nytimes.com/2009/04/13/business/media/13circ.html

    It will be interesting to see what sort of culture we end up with as we (consumers) refuse to pay for valuable things, and simultaneously shun advertising. I shudder. http://www.theatlantic.com/doc/200903/television

  6. This blog posts many entries about losses in the print media, bad business models, etc. The adoption of functional business/content models in print may present some image makers with new models (possibly some “trickle down” economics too). However are there some assumptions or implications that a health print industry will provide image makers with a healthy ROI?

    A great majority of these big media companies have shown very little virtue in how they do business with “content providers” during much healthier times.
    Why will they suddenly start behaving better when the economy turns, or a better models is employed?

    Getty Images started turning nasty almost ten years ago. EP (Editorial Photographers) came together to fight poor working models in editorial photography over ten years ago as well – after MANY years of decline.

    If it was legal to import and own a personal slave from Africa or SE Asia would you? There exist a sensibility of “fair value of trade”. Employing people below the cost of doing business may be an available choice – but it denies responsibility and lacks virtue.

    There are no free lunches. Models that do not allow for a ROI create bubbles and crashes. Without a ROI the economy in general stutters, shifts, and lunges in a race towards the bottom.

  7. Rob, Chris Anderson, Seth Godin, they’re all right, free has to go away. It can’t sustain any level of higher quality. Which is why truly great work is so hard to find these days, most of our planet wants everything for free. It removes guilt and remorse, promotes waste and encourages criminal behavior. It’s a cancer in many modern societies.

    Regardless of the direction our clients take in the future, the responsibility rests with photographers to run a business with conviction and strong upstanding. Until EVERY photographer says NO to EVERY bad deal it’s not going to get any better.

    Right now we desperately need to be flexible for our clients (magazines and print media, advertising, etc.) who are struggling, much the same as many of us are. Let’s hope the newly constructed and rebuilt business models allows for us to progress ourselves as well.

    Stay positive! Change is a beautiful thing, even if it’s unattractive at first.

    • @Chris Schultz, “Until EVERY photographer says NO to EVERY bad deal it’s not going to get any better.”

      If you’re right, then I’m going to go into the construction business or something– what you ask is like hoping an entire high school’s worth of teenagers will never touch a beer.

      • @Eric Schmiedl, you grasp the seriousness of the situation then. Our financial futures will be largely determined by our collective ability to push for everyone’s best interest with the highest of priority, regardless of what happens to worldwide business models.

        • @Chris Schultz, No, I’m making the point that the “union” attitude of “if we all demand $X, they will pay $X, but we all have to do it” is admirable but doomed to fail. There are too many people with brand new cameras and no clue for that to ever succeed. For that matter, basic economic theory tells us that the “union” idea (a price floor, look it up) means fewer photographers get hired.

          You getting paid a fair rate does not necessarily depend on every photographer in the world asking at least that much. It depends on:
          o) Photography earning the _client_ a value that is at least as large as your rate,
          o) You showing you aren’t the same as the guy that charges less, and
          o) You demonstrating that it’s worth the client’s money to pay your rate.

          • @Eric Schmiedl, Photography is too broad of a subject to impose a union attitude on. Every shoot is different. Every subject requires different variables to be considered, accounted for, paid for, etc. If only it were that easy, yes? Excellent point, Eric.

            To elaborate on my original point, which is closely linked to your fair rate explanation, is that photographers need to use better business judgment when taking assignments for advertising, editorial, weddings, tabletop, whatever the genre may be. We all need to know our value and stand behind it.

            Being allowed to shoot is not the compensation, it’s a favorable bonus. If photographers wanted to shoot without getting paid they would drop the professional persona and just have fun with photography. The payoff is making a decent living while also being appreciated for an undervalued, unique talent. Sticking a feather up someone’s butt does not entitle them to be called a chicken. Therefore owning a Canon camera shouldn’t automatically entitle anyone to be a professional photographer either.

            We all should be saying no to a scenario where a client means to say, “Oh, you’ll get photo credit in exchange for producing and funding the shoot, calling in priceless personal favors, retouching everything for free, expending days of creative energy and stressing yourself out over us deciding to have no budget. It’s a really great offer and if you don’t take it we’ll find someone else whose talent is good enough that will happily accept our terms and get our images finished by yesterday.”

            At the very least basic expenses should be covered in advance or billed direct. If the client can’t even afford that then what the hell are they doing in business anyway? Now we wonder why everyone is worried about the quality of content?

  8. Content, content, content! It has to be something WORTH paying for. Whatever happened to having demanding standards? Excuse me, but I still believe in the words of Emerson; “Build a better mousetrap and the world will beat a path to your door.” In my opinion, if publishers continue to settle for ‘cheap’ content, they’ll have the same problems.

    And, with all of these speculative models, has anyone actually taken the time to survey consumers to see if they’d be willing to pay for media and how much?

  9. I also want to point out something from Jason Pontin’s excellent column:
    “Editors can charge readers for content that is uniquely intelligent; that relies on proprietary data, investigation, or analysis; that helps readers with their jobs, investments, or personal consumption; or that is very expensively designed. Everything else should be available free, because it is news or opinion, which are commodities [...] Here, although the quality of the editorial should meet the minimal standards of a publication, editors shouldn’t invest too much time or money: good enough is best. ”

    If Pointin is right — let’s assume he is — this means that it will no longer make sense for publications to hire expensive photographers in the “commodity” categories, and the “good enough” bottom feeders or writers-with-point’n'shoots will win out.

    • Hasn’t the “good enough is best” scenario already occurred? If that is indeed where we are now things aren’t looking so good.

      Surely most haven’t forgotten that an unbelievably amazing cover sells more copies of the media than something that is simply “good enough”.

      Although, I dare admit even an awkward photo illustrates the point much more efficiently, easily and directly than any amount of copy can, both with a glance or thorough read.

      • @Chris Schultz, While it has definitely occurred and is occurring, I think with your cover analogy, you have taken it to extremes.

        Sure, you need a good cover to sell (just look at all the well known male athlete head shots that appear on Outside Mag every month – it didn’t use to be about like that), but having a good cover is one thing. Having content that is good enough is another thing.

    • @Eric Schmiedl, the “good enough” is already happening and it is clearly here to stay. You only have to look at some large aid organisations web sites and you can see that non-professional (read: untrained; have a totally different role), are producing content for the organisation. For some businesses, good enough, is good enough – so why not use it?

      Makes sense from a business point of view.

    • @Eric Schmiedl,
      You can’t imagine the effort that goes in to producing crap for the front and back of the book that has already appeared somewhere else (like they read it in the NYTimes and made it into a health story). This all puts the squeeze on original writing and photography in the feature well. They need to get rid of it not half-ass it.

      • @A Photo Editor,
        Couldn’t agree more, Rob – if we all do our job well, better photography and better journalism will be published and paid for accordingly while shitty work will be generated and acquired at rates it deserves. And we, as publishers, had better learn quickly which camp to pitch a tent in…

  10. I don’t do “good enough” because good enough equals “death”. The publications that have nothing unique to say or offer, they are dying and for good reason. Death to “good enough”

    • @Andrew Pinkham, Yep! I always remember that it’s going to have my name on it so it HAS to meet a minimum standard.

  11. A lot of people give their content free, good content, only because could help them to sell something else. So sometimes the business model is based not on selling content but just on advertising for example.
    In the last 5 years in the photography business (not picture but cameras and lenses) we found a lot of blog / site that share great content but they earn from advertising (DPReview) or workshop (Strobist).
    I believe that free sometimes could be good also for business.

  12. 2 weeks ago I was creating estimates for 2 different jobs, different clients. One client was local the other out of state. Both shoots done in the same state (one location local the other a day’s drive out). One client knew what they were getting, knew the importance of good imagery for their client (it was a marketing firm) and understood the costs involved, convinced the end user of the importance and need to pay a professional. No problem with estimate, great to work with, paid promptly (overnight FedEx even). We’re talking future work.

    The 2nd estimate, local client, also a marketing firm but only a puppet of the end user who wanted a nearly free “introductory rate” for 2 corp headshots. I Didn’t hear back after I responded I don’t do introductory rates but would be happy to work with them at my quoted rate and discuss a volume discount on future work.

    Two polar opposites. Who do you think I’d rather work with? Unfortunately, the former is getting exceedingly rare and the latter uncomfortably common.

    I have a response to the free requests and promises of “exposure”.

    You can die from too much “exposure”.

    I’m with Harlan.

  13. I was just on vacation for ten days; I flew into Iraq with my M14 [ still had it from my draftee days] and took some images for my blog. I had nothing better to do; then a friend researched the captions to make sure I did not misspell or misplace anything. Than another friend made sure my grammar was correct; than another friend helped me color correct my images; and another did the code so that they appeared nifty in all the different browsers.

    Hey we nothing else to do and I have lots of floating cash.

    Yuppie for free content.