The new entry-level price: free

A few recent events reinforce a theory I’ve been noodling over for a couple of years: the new reality for anyone trying to build a business in the digital world is that the entry-level price for customers is now zero.

Media companies need to pay attention, and maybe discover some new opportunities.

Two examples from outside the media world:

• On Thursday, Adobe launched a free version of its powerful and pricey Photoshop, called Photoshop Express. According to the trade press, the Photoshop brand was at risk of becoming irrelevant to young users who have access to lots of free tools.
• Yesterday I was looking for a system for creating invoices and keeping books for my consulting business. I checked out a few systems, including QuickBooks Pro ($180) but discovered that QuickBooks Simple Start (free) is perfect for my needs right now. Thus ended my search for an accounting program. And when my needs grow, I can already see what I’ll upgrade to.

Closer to home, this week at MaineToday, we were developing pricing models for our upcoming MaineYellowPages.com directory program. Guess what: the biggest discussion was how to pump enough advertiser value into the free level. Big change from the days when we tiptoed around the idea that classified advertisers wouldn’t buy newspaper ads if we gave away something free online.

Point is: Craig didn’t invent “free” — classifieds or otherwise. The “free” train has been flying down the tracks of the Internet since ’95.

But for years, anyone with a digital-disruptable business model studiously avoided hearing the whistle. They instead focused on how to keep current customers paying, not how to attract new customers with a free entry level. Their theory was that giving away something for free devalues the paid product. (That was the paid vs free content debate. Seems so 20th Century now.) Meanwhile new entrepreneurs, with nothing to lose, got creative about exploring free.

For a local media company, the issue of free advertising is critical and isn’t going away. Local businesses are discovering all kinds of new ways to find customers, including strategies that cost them little or nothing out-of-pocket. Most of these businesses are probably not even your current customers. When they’ve become successful with their free strategies and they’re ready to pay for something more sophisticated, where will they spend that money?

The challenge is to create programs that expose local advertisers to your local audience, with a tiered value level that starts at free and moves up from there. When free is the assumed entry level, the competition is for those entry-level customers’ time, not their money. So there needs to be a good ROI for even the free advertiser’s time. The revenue challenge is to make sure there is enough value at the higher tiers so the financial ROI works for paying advertisers. And then overall, there needs to be careful management of technology, cost-of-sales and workflow to ensure the entire program returns a decent profit.

This isn’t simple, of course. But a first simple step is to change the conversation in your media company. Try this as a starter: “There are big new opportunities in free advertising. How can we take advantage of that?”

Who’s NOT reading the paper?

Traditionally, media companies pay a lot of attention to who’s in their audience. It’s how you sell advertising, right? Because what you’re really selling is your audience. The better you can describe your audience, the better you can speak to an advertiser’s needs.

What’s harder to think about is: who is NOT in your audience, and what are their needs? Those needs could point to new opportunities.

A recent report from ComScore describes the habits of print and online news consumers and makes some important observations. (Let’s leave aside for a moment that they’re obviously measuring usage of world/national/entertainment “news,” not the tougher category of local news.)

Here’s maybe an obvious observation:

Non-newspaper readers are likely to be younger, and they are actually heavier than average online news consumers. Meanwhile, heavy newspaper readers are more likely than average to engage with traditional print news brands online.

Here’s something less obvious:

TV news brands are also heavily visited by non-print newspaper readers, underscoring the importance of sight, sound and motion to the digital news experience. Non-readers were 29 percent more likely than the average Internet user to visit FoxNews.com and 15 percent more likely to visit CBS News Digital.

So if you’re running a newspaper brand, what are you doing to serve those people?

And here’s a question not asked in the comScore survey, but possibly as important: how  about internet users who don’t intentionally seek out news in any medium, let alone local news? What do they need that a newspaper brand could serve?

The least publishers can do

The New England Newspaper Association’s spring publishers’ conference was this week in Boston, and I was asked to put together some remarks. (The circumstances were very unfortunate, which I’ll explain at the end of this post)

As promised to the attendees, a PDF version of the presentation is attached here: NENA publishers 3/14/08 A bit of context for everyone else:

Newspaper publishers — and here I mean the individual at the top of the organization — are getting whipped around by a tsunami of information and opinion, often conflicting: from the trade magazines, from people in their own organizations (online, news, advertising, operations, IT), from their peers in the industry.

These publishers are fully consumed with navigating their newspapers through the here-and-now, let alone developing a vision for the near-and-far future.

So my point is that publishers can dedicate a small amount of resources and become much more comfortable and confident in leading their organizations forward. It takes a very a small amount of their own scarce time and a little of their organization’s resources to begin developing the unique vision for their market.

How small is that resource? As you’ll see on the last slide, I literally added it up, and for 2008 it turns out to be 1.2 FTE of existing staff time, 80 hrs of the publisher’s own time, and $16,260 cash.

Seems like a small price for a publisher to pay to reclaim his or her leadership role with confidence.

A note about the circumstances: I had planned to attend this conference mostly to hear John Fish speak. John was publisher at the papers in Topeka, Kans., and Naples, Fla., and in both places had a vision for online that included hiring Rob Curley. And in each case John and Rob made big things happen. I was looking forward to hearing John’s guidance to other publishers on thinking differently. Unfortunately, the day before John was to speak in Boston, he was hospitalized with a condition we all hope is minor and temporary. In pinch-hitting for John, I hope I served him well. Our thoughts and prayers are with John and his family.

Dear angry journalists, don’t get me started!

There’s been plenty of attention lately about the Angry Journalist site, including a pretty good overview by Steve Outing on E&P.com. If you haven’t seen Angry Journalist, I suppose you should check it out before reading on, but the name pretty much tells you what you’re going to see. It’s sadly predictable. Better to just read Outing’s column and get some context.

Speaking as someone who has spent over half of my life proudly working with journalists, and sometimes labeled as one myself, I’d like to make a suggestion to the poor souls who count themselves among the Angry: Life’s too short to be spent so miserably.

If you’re an Angry Journalist and you’d like to be less so, please consider:

1. Journalism is a profession, not a priesthood. You’re not a journalist unless you’re working for someone else (who signs your paycheck). And you’re not much of a journalist unless you create something that an audience wants.
2. Ever heard this? “They still haven’t figured out how to make money online.” Tell that to Google. Draw an audience and you can make money. As a journalist, make it your business to draw a bigger audience. Become an expert at it. Need ideas? Read Howard Owens regularly.
3. Be a rebel. Go talk to an ad rep, or a marketing person, or customer service rep. (You know — somebody you’re not supposed to be talking to.) Ask what they’re hearing from customers, what they like and don’t like. Here’s the hard part: don’t shrug it off — act on it.
4. You’re not the victim of someone else’s screwup. Take responsibility for turning around the situation at your newspaper or TV station. In other words, if you’re not part of the solution, you’re part of the problem. Literally.
5. Be humble. Starting today, decide you know nothing about what people want to read/know/watch. Make it your business to find out.

If all else fails and you’re still an Angry Journalist, please, go do something else. Free up that FTE for someone who’s not so, well, angry.