Thursday, February 26, 2009

The Value of Free ...

So I'm coming up on a milestone here. Among my freelance gigs, I'm the site editor for a website called houseplants.about.com. I've been running the site for about six months now -- it started as nothing, with not a single word of content. This month, I'm within striking distance of 100,000 page views, or PVs in Internet-speak. Not too shabby, if I do say so myself.

But, you know, it's actually kind of bittersweet. Here's why. About.com is part of the New York Times Company. It's a big aggregate website comprised of about 800 individual sites like mine, each on specific topics. I got houseplants because I've been writing about tropical plants for years, and houseplants are basically tropical plants grown inside. All told, About.com is one of the 100 most visited websites in the world, which translates into about 60 million unique visitors every month.

On my website, 100,000 monthly PVs translates into about 30,000 unique visitors (each click is another PV).  

Here's the bittersweet part. One of the best-selling houseplants print books in the world is The Houseplant Expert by Dr. D.G. Hessayon. It's a pretty good book -- I own a copy myself. According to the cover sunburst, Dr. Hessayon has sold more than 1 million copies of his book since the first printing many years ago. 

You already know where this is heading right? 

The truth is, guys like me are putting guys like Dr. Hessayon out of business. I just don't see any other possible future. And that makes me sad.

But the economics of the situation are irrefutable. Check it out. Let's assume that Dr. Hessayon sold exactly as many books as I had unique visitors last month. Here's the math:

Total cost of user experience for Hessayon: 30,000 x $10/book = $300,000.
Total cost of user experience for my site: 30,000 x $0/PV = $0.

Zero dollars. I'm free. The whole dang Internet is free. All of it. Given away. For nothing. And I'm not just blowing smoke when I say that my content is every bit as good as Dr. Hessayon's. How can I be so sure? Because I do a competitive analysis against his book (and a few others) with every article I publish. 

I can pretty much guarantee I'm not making Hessayon-like money off my site. I'm sure his first 30,000 books sold netted him a rather lot more money than my Internet revenue from last month. 

I don't really know what the solution is for this. Content is king in today's media climate, but increasingly, content is free. In another two years, there won't be any need for new reference books on houseplants, because I'll have built a comprehensive site that offers all that nifty info for nothing. It'll be advertising supported, and I'll make a fraction of what the print authors make, even if I'm pulling in 12 million PVs a year (which is totally realistic). And how long is it until this trickles into novels? How long will it be before a Kindle file can be e-mailed around the web for nothing, just like an MP3 file today? 

I hear a lot about the future. How authors will have to develop alternative revenue streams because books just won't make any money. Already, old-line media companies are dying -- and trust me, I have firsthand experience in this. When the Tribune company declared bankruptcy, I was one of the unlucky bastards they owed money to. This means I find myself tied up in bankruptcy court for a few measly invoices.

It's depressing. No doubt about it. But it's also a little thrilling ... And tomorrow, I'll tell you why.

5 comments:

Mark Terry said...

Okay Jon, I'm listening. I'm a couple weeks behind on Time Magazine, so I'm in the middle of an article about saving newspapers, although I'm wondering how that's going to happen.

I've been thinking about different models and how I might fit into them, were I of an entrepreneurial bent. For instance, how about a website that consists of articles on particular topics (say healthcare), which are then syndicated to whatever newspaper/media outlet that wants them, for a price. It's essentially a nice version of AP. I can see it happening.

I can also see many dead-tree-media companies going totally digital, then being forced to charge for access. The problem with that, as most newspapers have discovered, is there's always somebody out there offering it for free online. So why should I pay, for instance, for The Detroit News website when I can get the USA TOday website for free?

Going back to the first idea, why should somebody pay for news on The New York Times website if they can get the same story for free on markterrysnews.com, or something similar. Why would they want to? Presumably because the NYT is the NYT and you can believe them. You can believe me, too, but I don't carry that kind of weight.

So, I was pondering today no less--are you and I now channeling each other the way ERica and I channel each other?--how exactly one can make money off a website. Instead of being a freelancer like I am, should I jump into the media/publishing business in my particular areas? Is that a bigger headache than it's worth or is it the road to millions of dollars?

It's not an insignificant question. For my biggest client I was basically hired when the last guy who did these market research reports and newsletters got fed up with being an employee and started his own basically the same newsletter, then supplemented it by writing and publishing and selling the same type of big market research he was writing anyway. Only he was keeping all the profit.

One of my other clients, the one who flew me to NY last summer for a gig I eventually quit (but still keep on as a freelance client), started her media empire with a single magazine she started out of her living room. They now publish about 30+ publications and there's a lot of money floating around there.

So sometimes I think: Why not me?

LurkerMonkey said...

Mark,

Literally million dollar questions ...

My workload has increasingly been migrating online for a few years now. As far as making money off websites, there are a few ways to do it: advertising, paid memberships, and pay-per-click sites. Basically, advertising sucks as a revenue stream, especially in today's climate. And you can only get paid membership if you have a killer site on a specific topic with loads of content. Truth is, even the newspapers can't charge for content -- I know they wish they could, and the WSJ gets away with it, but the NYT already failed in that experiment. Diet sites, however, and professional trade sites can often make money charging for content. And finally, the pay-per-click sites can do OK, if you're hooked into an affiliate network. These guys are basically aggregators. They don't generate content -- they just hoover up links, master search-engine-optimization, and drive traffic. Most of the cheapie porn sites are like this. It's not actually some guy taking photos or shooting video -- it's some guy who buys into an affiliate program that provides content and he puts up a website to drive traffic.

Your healthcare idea is actually a hot one, and it's being pursued right now by three or four big sites. I started out my online writing working for a healthcare start-up ... they built a huge database of patient guides, and then sold the company to one company, which was then sold to NBC Universal. The idea worked back then, but even NBC got beat (which cost me a 6-year steady contract gig), and today healthcare content is essentially considered a commodity. Everyone licenses it from one of the established providers.

I have not started up my own website, at least one that I own (I'm an employee of About.com). But I think there's still plenty of ways to make money online as a freelancer, just maybe not as a publishing entity. I think it's more valuable to view the web as a vast marketing and traffic tool, and as a freelancer, find ways to fit into that puzzle.

I have found that the old pay-per-article model of freelancing doesn't really apply to the web. There's just no money in writing 500-word articles for individual websites. At least for me, it hasn't worked like that. Instead, my online money comes from longer-term relationships whereby I maintain and update content remotely, working directly in their content management systems from my desk. It's nice, too, because the money is steady, every month, which is a real boon for freelancers.

LurkerMonkey said...

One last thought: I think newspapers are pretty much toast, as much as I hate to say it as a journalist by trade. To me, the discussion isn't how newspapers will survive, it's how will journalism survive. And that's a whole different, but very important, issue. Maybe another post ...

Mark Terry said...

I'm afraid I agree with you about newspapers. I'm concerned exactly as you say--how will journalism survive. I see--and want to write for them--the Pew Institute has started a Healthcare Policy News site (I've already discussed working with them, but so far no luck) and it'll be interesting to see how it shakes out. We may see a lot of journalism go away from newspapers to organizations funding reporting--which will probably get a long ways away from supposedly unbiased reporting.

For instance, I can see an organization like, say, Greenpeace, funding reporters for environmental reporting, AMA funding medical reporters, etc. They'll have to have pretty deep pockets, but I can imagine it going that way. They may then get it to pay for itself via syndication of some sort.

Anyway, I had a discussion with one of my editor/publishers a couple months ago about going into publishing and he flat-out said it was an awful time to be a publisher. He noted that newsletters were big in the 1990s, but have started to soften, which is why so many organizations like his have branched out into market research reports and, perhaps more importantly, events like conferences and summits and webinars. The straight journalism market keeps expanding just in order to stay alive.

I'm of the opinion that if I were to do something crazy like be a publisher, I would stay away from the consumer market entirely and work on B2B within some nice, quite possibly a niche within a niche, for instance, not just healthcare, and not just, say, clinical diagnostics, but focus on hospital laboratories or physician office laboratories, or perhaps even within those categories, focus on hospital outreach. You decrease the size of the niche but can hope for increased penetration within the niche. At least in theory.

Zoe Winters said...

hmmmm, I'm not sure. I often prefer to buy a book on a topic if I can, instead of just surfing for free information on the internet. If I need the information right this second or I'm only mildly interested in it, or it's so obscure I'm not likely to find a good on amazon, sure, internet.

But like right now I'm doing a lot of reading about copywriting and I ordered several books by Bob Bly, and I didn't even once consider getting my information off the internet.

Frankly because the information is a little specialized and there is no bullshit detector built into the internet. I know Bob Bly isn't going to blow smoke up my butt because I know he knows what he's talking about on that topic.

Hence I'm more than willing to pay for the info. And I like physical hard books that I can underline and make notes in.

Plus it's a tax write off.