The cost of giving it away

I am one of a declining number that likes to read a Sunday newspaper.

Recession notwithstanding, I am also one of those people that tends to struggle more in terms of time than money.

Therefore, I generally only have time to read one newspaper a week. The choice of newspaper is effectively zero-sum. I choose one newspaper; the others miss out.

I’ve deviated from that choice in recent weeks. Whereas I used to pick the Observer without fail, a lazy Sunday prompted me to give the Sunday Times a go.

And I enjoyed it. So much that I bought both newspapers again the following week. With time constraints restored, substantial amounts were left unread.

I therefore need to make a choice between the two titles.

And my choice is likely to be dictated by the quality of their websites. Both the Observer and Times offer the majority of their content online in an ad-supported free access model.

But rather than an excellent website causing me to buy the print edition, an excellent website may cause me to forego the print edition.

While print and online may complement, they also duplicate and cannibalise content.

If I am paying for a premium model, I want the greatest improvement in utility to justify that.

This example points to a problem with the Freenium model that I have.

It doesn’t work in perfect competition.

It works for companies like Flickr because Flickr stores my photos and logs my activity. Utility and the cost of switching increase the more I participate.

Newspapers don’t reward relationships (aside from getting the answer to the previous days crossword). So in each transaction, the additional utility in the premium model needs to be justified both against the free version and the competition.

Where (premium, competitive) newspapers are of equal quality, hikes in utility are dictated by the quality of the (free) website.

An inferior website equals a greater hike.

And so the loser in the pitch for my pocket may be that which has invested the most in their website.

Does this mean newspapers need to sabotage their websites in order to increase the value of their premium products? Such as bringing back walled gardens or keeping the best content offline? Henry Blodget thinks so.

Me? Newspapers aren’t my forte so I will resist the urge to speculate. But it raises an interesting question about their ongoing viability in a converged world.

sk

Image credit: http://www.flickr.com/photos/flavio_ferrari/

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Links – 22nd February 2009

Some of the things I’ve read over the past week and would recommend:

• There have been some interesting events occurring in London over the past week: John Griffiths went to the NESTA workshop, and Anjali Ramachandran and Eaon Pritchard both went to see Seth Godin speak

• A thought-provoking article in the Atlantic on the future of TV. It argues that TV’s USP is immediacy. While there are still cultural reference points via TV, scripted shows will increasingly see TV as just another distribution pattern. TV will therefore move to concentrate on news, current affairs, live reality shows and sport. This makes sense to me given my research – TV excels at events which are essentially DTR-proof, and the most popular shows online are dramas and comedies that can be viewed at leisure and shared/discussed asynchronously. However, I would argue that successful scripted shows still need TV as that anchor point for mainstream cultural crossover.

• Another article on the future of TV, this time in Advertising Age, comes from the perspective of consumer choice in the ad-supported model

• A fascinating post in Salon on Nicholas Nassim Taleb and our weaknesses in risk assessment

• Ana Andjelic has a great post on our general failure to accurately predict the future. Not only does she argue that a lot of campaigns will fail, but also that our limited perspective means we will often follow the same patterns (potentially of failure)

• Tom Ewing takes a line from a Bob Dylan track to point to a problem faced by market research and information consultancy

• Nigel Hollis asks if retail brands are inherently local

• A discussion with Rishad Tobaccowala, Faris Yakob and David Pescovitz on the future of technology and marketing produces some great soundbites

• Writing in Mashable, Whitney Hess gives a nice overview of user experience design

• Business Week seeks to debunk six social media myths

• Caleb Kramer’s lessons learned from brandjacking Burger King on Twitter

sk