This Mark Potts post about the upside-down pricing of the WSJ online-only edition got me thinking about the old (well, old in web-years) adage that “information wants to be free…but it also wants to be expensive.”
Maybe this is so obvious that it’s not even worth saying, but that’s rarely stopped me before. When the the unit production cost of any good approaches zero, what that good really wants to be is ubiquitous. And information–particularly news– on the web is sui generis in at least two reespects: regardless of the total production cost of a piece of content, the average unit cost has the potential to be trivial because replication is free. And unlike any other good I can think of, the marginal unit production cost is exactly equal to the marginal unit distrubution cost, and both approach zero. It’s hard to imagine that even the most arduous, long-form, Pulitzer-winning series of articles will have an per-unit cost of much above the asymptote–and here’s the perverse thing–if enough people want to read it.
It’s Say’s Law in reverse: demand creates its own supply. The more popular something is, the more of it exists, and the only “cost” in the whole affair is the “lost revenue” which content sources suddenly claim is their birthright. (Ironically, old newspaper hands used to say that they were happy if they covered the cost of their distribution networks with subscription revs). But the problem is, online news and the link economy were born as conjoined twins, there is real business danger in trying to separate them. At the outset, what publisher really knows what will work and what won’t in terms of free vs paid (e.g.. Potts’s example of the WSJ iPhone app)? Movies, music and books are different, because they were born in a content model, not a media model. They relied on the link economy for building buzz and sharing enthusiasm (I know I’ll get the music argument here, but it’s settled by now). And please: those who keep pointing to the same hackneyed paid content examples–Zagat’s and Consumer Reports–does anybody really want to own those businesses for the next ten years in the face of companies like Yelp! and BazaarVoice (an AV company)?
There are a lot of departure points for arguments that label paywalls and cartels as acts of futility. But this one seems like the best: if you’re in the business of charging money for something that has marginal production and distribution costs of zero, it might be time to find another line of work. Like, for example, preventing snow melt from running down mountains.