A couple of days ago, Chris posted Straight Talk on the Price of Free Content, a discussion post on the role of free content in publishing.  The problem with such discussion points is that much of the discussion around Free Content tends to get muddied by traditional business thinking.

If you have grown up prior to, well, now, or have and MBA, you expect a direct relationship between what you do and your income.  There is probably a formula for it, which is every bit as iconic as e=mc2, a formula like: W=$ (work=money). You do some work, you get a tangible result, commensurate payment.

With Free Content, that relationship is broken. If I post some Free Content, doesn’t matter what kind it is, the immediate payment is:

• The opportunity to display my mastery of a subject and a chance to increase my standing in the community I address.
• A chance to draw attention to or generate traffic for my blog/business/consulting/design gig.

Both of these are intangible payments. It is revenue of a sort, but if you plug that into the common understanding of what happens when we work, we do not expect to be repaid in website traffic, or acknowledgment.

It’s very hard to put food on the table with what amount to personal accolades.

The problem is that consulting types, VCs, and people looking to make a living off the web is that they are looking for revenue in the wrong place: free content is about generating indirect revenue.

For example:

• I post to a Blog for a year, and get a publishing deal from it.
• I run a Blog and post a detailed Presentation, and that leads to speaking offers.
• I post a Podcast, and that generates the traffic that drives my advertising revenue.
• I post a Webcomic, and that leads to marketing gig.
• I code some Open Source Software, and sell support for it.

Notice that in all of those examples the initial transaction is free. The author is giving up their time to entertain and educate the reader, listener, or viewer, without asking for direct payment.

There are many people that want to make a claim that this is a brand new world we live in, a new economics…um, no, it isn’t. Sorry. The Free Content business model is nothing new: it is the same model that broadcast television has been using for 50 years.

For a television broadcast, the viewer pays nothing, other than the opportunity cost of watching another show. The cost of the production of that broadcast is shifted, to advertisers, syndication outlets, or purchasers of the inevitable DVD collection.

With Free Content, the consumer of the information pays nothing to the producer; instead income comes from speaking engagements, book sales, or consulting contracts. The payment for the content is decoupled from the consumption of the content, but theoretically the model does not change, just the degree of separation from content to revenue source.

That is why things like Matt Maroon’s Bubble 2.0 post seem off the mark.
In a sense, he is right: you need to ask where the revenue is coming from, and a revenue model that is based on generating revenues directly from Free Content is not sustainable in the long term. Once the money dries up, that’s the end of the show.

I think there is still question that needs to be asked before we automatically write off one of these “Bubble 2.0” companies: how far removed from what we want our audience to do is the revenue stream?

If there is revenue tied indirectly to the content produced, then there is a repeatable, sustainable, revenue model. It may be hard to quantify, and it may be less than if you were getting paid directly, but forecasting revenues from that content is possible. All you need to do is keep producing Free Content.

Where does that leave the venture capitalists, private investors, and fortune seekers that are backing “Bubble 2.0” endeavors?

They need to ask if the Free Content they are producing generates repeatable indirect revenues, and if not, what they can do to align their Free Content with a business model that does.

Preferably, before the seed funding runs out.

With the slumping economy many are shopping for the best bargains, including my family. Recently we visited a local retailer that offers “low prices, everyday” and picked up a few items at prices that were certainly lower than I had seen elsewhere.

But when I had to return one of the items the next day, I realized where I was really going to pay the price – customer service. Before I could enter the store with the item, I had to “check in” with the employee at the door. There were 4 people in a line ahead of me who also needed to check in returned merchandise. Each item had to be scanned, and then verified by the store employee. However, the employee had no idea how to run the scanner and spent most of the time staring blankly at the handheld screen. I waited in this line for 20 minutes.

Next was the line at the “Customer Service” desk with my newly verified merchandise (despite the fact that I had a receipt.) One employee, six customers in line, and not a smile to be found. I waited in this line for an additional 20 minutes.

Now to purchase the replacement item, and back into the line for checkout. Of course the employee in my line closed her register with 2 people still in front of me because it was time for her break.

So what does this have to do with publishing?

It seems that with all the discussion about the future of publishing, one item that seems to recur is the fact that books are too expensive. Simply switching to e-books eliminates that problem, or so many would have you believe.

Consider for a moment customer service. Not only does the publisher need to provide customer service to it’s customers – book stores, distributors, retailers – but we also need to support the ultimate consumer: readers.

Inside the front cover of Wiley trade publications you will find an 800 number. On the other end of that number you will find a dedicated customer service staff ready to answer a variety of questions and provide solutions to reader problems. You can also access customer service via support.wiley.com

Often these questions are solve on the spot, but sometimes they are routed to editorial staff, and we sometimes send them on up to the authors.

For our Wrox programming titles we also provide a support forum at p2p.wrox.com where readers can interact with a variety of technical experts and authors.

It’s not just paper and ink

Customer service is but one area where book publishers have an opportunity to differentiate themselves from other content providers. It is certainly not enough – we still need to be innovating (faster) – but it is certainly part of the cost equation.

So where does this leave publishers? The book publishing companies and music companies seem to have been left out of this equation. You could argue that they’ve left themselves out of the equation by desperately attempting to pretend that the business model of content creation hasn’t changed while vainly suing fans for the crime of being early adopters of a new economy.

Actually, there is a role for clued-up skills-rich publishers. It’s just a slightly different role than they’re used to. The clues can be found when you examine the new business model summarised above and look for the holes.

(Thanks to Publishing Talk)

According to Karen Croxson, digital piracy may help companies. As a new-media minded person working in a traditionally old-media world I am a little conflicted here. I am coming around to Chris Anderson’s Free mantra, and I absolutely believe my industry had better move a hell of a lot faster to adapt to the digital changes in the market. But I am having a bit of trouble coming to terms with Ms. Croxson’s justification as to why piracy is ok.

Ms Croxson points out that piracy poses a threat to sales only when those who otherwise would buy become tempted instead to copy. In any market there are some who value the product but never would buy. Their piracy cannot harm the seller.

Yes, but how do you tell them apart? Do you think that people download content illegally because they don’t value it? They download it because it’s free, and because they value it. Of course they say they would never buy it because it justifies their stealing it, and because they don’t have to buy it – it’s available on the P2P network.

Quite the opposite: because, like any consumer, a pirate will talk to others about product experiences, copying which does not displace sales can actually help business.

Copying does not displace sales? So my friend tells me he can’t wait to get the Band X CD this weekend, and I just burn him a copy of mine. No sales lost?

Consumer `buzz’ is hugely important for sales success, studies have shown, and piracy drives up buzz without the need for extra marketing.

Oh, it’s about buzz. So, if I waltz down to Best Buy and shoplift a copy of the new Rick Ross CD (because I would never buy it) but tell my friends about it, then I have justified my stealing of the CD? And if I walk out of Barnes and Noble with a copy of Oprah’s latest pick tucked under my coat, but tell my Mom about it every thing’s ok?

Not even the pirates believe this. Just take a look at the comments on this topic over at Torrent Freak. For example:

I’m not gonna lie, I mostly download album and film cuz i’m broke and can’t buy all the stuff that i want.

or

this article makes me feel bad,really bad, i only download stuff i WANT to use,movies i WANT to watch,books i WANT to read,for free

I think that free content definitely has a place in our industry. I think we need to cast off old ways of thinking, and create new products and new business models in order to remain valid in the new media economy. I even think that seeding content via P2P for promotional purposes is an acceptable strategy. We are looking at Social DRM as a replacement for current technologies. We are taking steps (slowly) in the right direction here, but in these cases it is the intent of the content owners to do these things.

But don’t try and justify stealing by telling me that it’s good for my business.

Admittedly I am biased here, but at the same time I am one of the outspoken ones in my company when it comes to adapting to the changing landscape. What do you think? Am I way off base here?

(Photo credit Nick Humphries)

David Rothman agrees with Adobe’s Bill McCoy on the use of Social DRM, but also understands the challenges of implementing such a system.

How expensive would it be to run a social DRM system on a mass scale? More or less costly than the current crop of traditional encryption-based systems? Could expenses be reduced by avoiding the use of encrypted credit card numbers and relying on verified names and physical addresses instead—perhaps in cooperation with services like PayPal and credit card companies?

Rob Preece says copyright is not dead, despite what Gerry Faulhaber thinks, and social DRM will only work if all users respect copyright.

If we can’t have social DRM, that is, if users insist on freely copying without regard to authors’ rights, then we certainly will have DRM, no matter what the inconvenience. Because one way or another, the economy depends on our ability to protect the rights of copyright and patent holders.

Finally, according to Todd Jonz the effects of piracy on content producers is a lie.

Yes, piracy exists; it always has, and it always will. But study after study has shown that the vast majority of consumers, certainly enough to sustain a healthy market, will pay a fair price for digital content if it is made available to them in the unencumbered formats they desire.

I know where I land on each of these issues, but I want to know what you think. Should publishers abandon DRM, write off piracy as the cost of doing business, and just concentrate on creating great content for which consumers are willing to pay? How would you feel about the Social DRM model, where we would imprint your name – and possibly other information on your e-content?

(Photo credit: Dori)

As we think about how publishing, media and journalism are changing, how do we factor in the speed at which media and information enters our lives?

As content creators look to “capture eyeballs,” how do you get those eyeballs to slow down? Has media consumption become a near thoughtless process of scanning, filtering and digesting?

This is all the more interesting as the concept of having a “conversation” with brands has taken hold. Many are asking readers to create content, comment on a story, “friend” their brand, or otherwise engage in some meaningful way. In a crowded marketplace, what does it mean?

Enter “super-users” and “grazers.” I would bet that many of us are becoming super-users on certain media, and grazers on others. Of course, a single person can be both, depending on media type.

Dan goes on to break down the consumption habits of both grazers and super-users, so click through to Dan’s site for the full article.

I believe its a matter of intent of the content creator. Certain types of media are created to be consumed quickly, even real-time like Twitter, while others are better if lingered over like a good book.

One group Dan didn’t mention, but probably falls into the “grazing” category are the “snackers.” They want quick in and out experiences, tiny nibbles of content they can consume quickly and move on.

So, are you more of a Snacker, Grazer or Super-User?

(Photo Credit: Rakka)

Earlier this week, we started inviting a selected group of people to try a new, free tool that we are calling “knol”, which stands for a unit of knowledge. Our goal is to encourage people who know a particular subject to write an authoritative article about it. The tool is still in development and this is just the first phase of testing. For now, using it is by invitation only. But we wanted to share with everyone the basic premises and goals behind this project.

At first glance it seems that they are looking to take on sites like Wikipedia, and Squidoo, which they likely are but I wonder if there isnt an opportunity here for authors to leverage knol as an instant part of their author platform. Google says they want to use Knol to highlight the author as an authority on the subject.

The key idea behind the knol project is to highlight authors. Books have authors’ names right on the cover, news articles have bylines, scientific articles always have authors — but somehow the web evolved without a strong standard to keep authors names highlighted. We believe that knowing who wrote what will significantly help users make better use of web content.

“But I already have a blog,” you say. Yes, I hope so, but knol may be another part of your author platform, and more importantly perhaps knol content will be featured on Google searches in the same way YouTube results, News results and other Google properties are featured. Google has not said this – it is pure speculation on my part, but it seems likely to me.

Our job in Search Quality will be to rank the knols appropriately when they appear in Google search results. We are quite experienced with ranking web pages, and we feel confident that we will be up to the challenge. We are very excited by the potential to substantially increase the dissemination of knowledge.

So, perhaps this is a new addition to your platform and a chance for you as an author to increase your recognition as an authority on your subject. It’s still very early, so a lot remains to be seen as to how knol will work and how it will be received by the public, but I’d say knol is a tool you must review when it’s available.

1. It is one of only a very few from traditional print publishers
2. It is not just a branding play
3. They have built in some interesting sticky features
4. Good tie-in’s to their content

I believe items 3 and 4 are the most important for content providers. The Quiz is offered every weekday morning and the scoring system is probably motivational enough to keep many coming back for more.

In addition, they offer ample opportunities to click through to the content related to the quiz, and I thought the “study links” for the next day’s quiz feature was especially clever.

The scoring seems a bit off to me, but that’s likely because it was my first test on the first day. My particular ranking of 68% among Facebook users is strange as I got 100% on the first test. See how competitive I am already?

It is important to remember that we are in the very early days of Facebook apps. I am sure we will see many more from content providers as the platform matures and as companies figure out exactly what they want to accomplish with these applications. Still, it’s exciting to see traditional publishers playing here.

(Thanks Read/Write Web)

1. On the main page I currently have excerpts from the 10 most recent posts.  Do you prefer the full text on the main page, just want to click through to posts that interest you?
2. What’s missing on ckwebb.com?  Why do you read?  How can I make this space a real resource for like-minded readers?
3. And finally, can anyone tell me why the hell this site still isn’t listed in Google’s index?

One of the compelling lessons of the digital music revolution was that people wanted to acquire and share songs, not albums. The analogies to books are imperfect, because books tend to be more of an essential organic whole than albums, but even with books, especially reference or tutorial books, it’s certainly possible that someone wants only part of a book. Based on this idea, we’ve had a goal for quite some time to enable “by the chapter” purchase and download.

It also appears the content is to be delivered as DRM-free PDFs.

One of my primary competitors, O’Reilly has once again demonstrated how nimble they can be and even though many publishers have been working toward this goal, they will all be seen as following Tim’s lead on this one.

Time will tell if this model works for O’Reilly and in their usual transparent fashion I am sure we will get an update on sales in the near future.