Giving Away Free Digital Content: How Far Can You Go?

On: September 14, 2011
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About Jorrit Schaap
I am a digital innovator from Amsterdam with a master's degree in New Media and Digital Culture. I help companies that need digital innovation for their future growth. I combine my academic background with practical skills in web development, motion/web/graphic design and data visualisation. I wrote my BA thesis on the Cultural Meaning of Animals in Online Brand Identities, focusing on Mozilla Firefox and MailChimp, and my MA thesis on How To Videos on YouTube. During the Data Visualization elective course my team and I created the EU 2020 targets monitor, a tool for monitoring and comparing the progress of member states towards the 2020 targets and now hosted by the European Student Thinktank. In my free time, I play guitar in an indie rock band and occasionally perform as a veejay.

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Giving away free content is nothing new. It has been around as part of business strategies for centuries. However, many online businesses are using free digital content as a means of getting attention and building their reputation. How far can you go by giving away free digital content? What are the most used business models and can these models be changed in favour of a model in which all digital content is free?

Why free digital content?

My personal motivation for this subject is that I am interested to see if there could a viable model in which businesses can give away their digital content, yet still make money. I have a small website called Free Loops on which a friend and I give away video loops for free which can be used by veejays for example. Is there any alternative to selling content in order to create an income?

Defining free

There are a lot of business models built around the notion of free. Chris Anderson names a few in his book Free (of which a book review is available on this blog). All of these models however revolve around someone or something subsidizing the free users or free content. Either you give away one product and sell the other (Anderson calls this direct cross-subsidies) or you charge one customer or customer class to subsidize the others (the three-party model and the freemium model). This seems to be the only way giving away content for free can help your company: it should arouse the interest of customers to buy your paid content. This content could be anything from another product to another service you may offer. Giving away your content for free could also result in you becoming an important source in a specific field, which may lead to invitations to talk at conferences about your subject.
Basically, none of these business models are built around the idea of actually giving everything you make, every service you provide for free. And all of these models need you to have a certain audience in mind, so that you may become an important source within a specific field of expertise. Tiziana Terranova speaks about free in the sense of ‘not financially rewarded’ and ‘willingly given’. So if you give away one product for free and charge for another then yes the first product is not financially rewarded and may be willingly given, but you still need the other product to subsidize the free one. What if you offer every product for free? Can your business survive?

Seth Godin and Tom Peters on giving away content for free

Seth Godin and Tom Peters on giving away content for free

Money, time, attention, reputation

Let’s look at some factors at play here. In order to create a product, you will have to sacrifice time and money. Time because you need time in order to build anything and money because your business always has overhead costs that need to be paid. Somewhere along the way money has to find its way back to your business to at least pay your overhead costs. So it is impossible to leave money out of the equation. Time may be scarce, but that depends on your situation. Your reputation is an interesting factor, because it is created and maintained by other people. No matter what you say about yourself, in the end your reputation will be defined by your audience. But what about attention? Attention may mean you will get a lot of hits on your website. And if your plan was to make money from advertisements, this may get your hopes up. But attention is not going to pay your bills. Click-through rates are not high and even if your site is extremely popular, there is still only a small chance enough people will click the ads to actually make you any money. Of course attention is important, but it has to be integrated within a more sophisticated business model. You need money to keep your business running, you need time to build your products. Perhaps reputation is the key.

Monetizing reputation

Looking from a business point of view at consumers, you could say that reputation can easily be monetized. The content consumers create (which can be anything from blog posts to simple social interactions on a networking site) affect their and your reputation. If a certain customer is positive about your business’s product, the reputation of this customer becomes of value to you. Positive reviews by a consumer equals free marketing. Pressing the Like button, sharing something (anything really) or simply telling your friends about a product can all be very valuable to the relative businesses involved. But that is reputation on the side of the consumer. On the business side, creating positive reviews about your own content (ergo marketing and advertising) can of course be useful, but if all your products are free this will not make you any money since you have nothing to sell. A good reputation may result in users of your content donating small amounts of money to your business. However, it is hard to find peace of mind when your monthly bills have to be paid from infrequent donations.
What if you could measure your reputation in some way and calculate its value? Measuring the value of your reputation is basically what is being done by services like Klout. But even if you are giving away your content for free you still need people on the social media networks to act upon and interact with your messages in order to get a high Klout score. If people can find you (through for example search engines) and simply visit your website to download your content, your Klout score could rise a little, but it will not skyrocket as long as you are not a hot topic on the social media. Your Klout score then is no magic tool that will convert reputation into money.

How can the product make money for you?

Let’s go back to the hypothetical start. You’re giving away your product for free. People are using your product, whatever it may be. You may or may not be mentioned by these people who are using your precious content (you should be of course, but let’s pretend that you are not). You have no control whatsoever over the use and distribution of your product once your product is out there. Reputation is hard to monetize and all the attention you may get still will not evoke enough clicks on the ads on your website to pay the bills. What if there was something inside the product that could make money for you? Consider product placements in your free videos. Consider including a small message at the start or end of your free text. These methods only work if you are traceable as the source of the content and if the message itself points to another product or service that is not free. But remember that the content you give away can easily be modified and the original product placement or ads can easily be removed. You do not have control over the use of the content nor over the way people talk about your content. If users of your product do not name you as the creator of the content, no one will even know the content is coming from you.

Giving away all your digital content for free?

All things considered, all of the above models seem to have one important point in common: your business can not survive if all of your products and services are free. Free digital content is great as long as it promotes the sell of your paid digital content. If you want to create more sources of income (like endorsements or speaking gigs at conferences) you will need to cater to a specific audience and become an important source within a certain community. There seems to be no escaping these laws. There is no magic model that will convert your reputation or attention into a big cash flow. There is no online stock market that places a real money value on your company based on how many people are using your free content (the closest thing there is could be the digital fictitious value calculated by Empire Avenue). There are tools to measure reputation, but reputation in itself is useless if you do not have a clear audience. Once you have the attention of your potential customer because of your free digital content, you need to bring forward your paid services in order to thrive. Giving away all your digital content for free is then not the smartest move to make.

Bibliography

Anderson, Chris. Free. The Future of a Radical Price. London: Random House Business Books, 2009.

Terranova, Tiziaina. “Free Labour.” The New Media and Technocultures Reader. Ed. Seth Giddings and Martin Lister. London and New York: Routledge, 2011.

Further readings

On free digital content

Why giving away your best content is wrong and stupid (if you’re selling information products)

Is FREE good or bad?

On reputation, authority and social capital

I found my Klout on Empire Avenue while staring at the PeerIndex.

Measuring Your Online Footprint

<update>

I forgot one very interesting model in the above text. Namely a model in which money can indeed find its way to you, even if all your products are free. Imagine the following situation: you give away all your content for free. A consumer uses your free content and in return votes for your website in some kind of contest. This vote is free (the user’s content), just like your content. If you receive enough votes, you may win the contest and the prize may consist of money. So here your content is free, the user of your content gives away free content as well, yet you make money through an external system. Another example: you are a politician and you try to improve certain things for free. People vote for you, for free. But because of these votes, you’ll be awarded a certain position for which you will receive money. It’s the system that pays for your free content in the end. Of course, there still needs to exist a system that can give you these kind of awards, but I find this model quite interesting because it allows for the content – all the content – to be given away for free.

Jorrit – September 16, 2011

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