Though the argument between Gladwell and Anderson is fun to read and stimulating it completely misses the point of why Anderson is wrong about Free and why the newspaper industry is having trouble.
“Information wants to be free” doesn’t mean free as in beer… it is free as in freedom. Even putting it in that context that line has nothing to do with what’s going on in media.
The ad model has crumbled for broadcast TV and newspapers and magazines. It doesn’t mean that advertising globally is over or that charging for content or supporting content via advertising has crumbled. It is the failure of the cost structures of the troubled media. Ads simply don’t make the money they used to for these organizations. Why? Well, as we’ve discussed many times on this blog and elsewhere, because advertisers really know how to count eyeballs and transactions now. That puts pricing pressure on campaigns (especially long term deals and premium upfronts).
Why can’t Youtube make money? Plenty of advertisers put ads on youtube. No users click or respond to them. Not enough to cover the $360 million a year bandwidth bill. It would be pretty easy to actually turn a profit with Youtube. It would just have to stop being so Youtube-ish – i.e. get rid of the fluff content, make more ambitious ads, etc. etc. I’m sure that will happen once Google feels like Youtube can’t be significantly touched from easy competition. I’m sure this will happen soon.
This whole thing about making everything free or whatever. It’s hogwash. People pay for stuff they value. They click on ads that don’t suck and are relevant. The newspaper industry, as its old model stands, needs to change. Big deal. It will. yes there will be micro publishing and competition from bloggers and all that. Big deal.
I never really believed in the long tail either. Every company I’ve seen financials for that bet on the long tail hasn’t made a dime. If you look on itunes and amazon and shopping sites and news sites it’s still the hits that make the money. And hits cost money to make. and people value them, so they buy them. This applies to music, movies, articles, books, celebrities, products…. i’m not saying you can’t make money from the long tail… you can… but that’s like comparing making money from hotdog carts (the long tail of lunch) to running a multi-national chain like mcdonald’s (hits!). or maybe not. but hopefully you get my point.
I do agree with Gladwell on one point – there are no iron clad laws… except maybe one.. there are no iron clad laws.
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