Following on from the earlier post about Smashing Magazine’s cash crisis, and the extraordinary measures they’re taking to raise funds, and in response to a comment made there, it struck me that while there’s plenty of talk about how free content is an outdated and unworkable model, hardly anyone talks about the real elephant in the corner – free advertising.

Trying to break the free content model, some publishers risk looking like Canute

The common conversation, when critics of the free content model get started, uses the example of a real physical newspaper. ‘You’d never dream of getting it for free, would you?!?’ they say scandalised. Well, there are plenty of free papers out there – in most cities you’ll find free local papers that survive based on circulation, low distribution costs, and highly targeted advertising. Obviously it’s not fair to compare your local event guide to the New York Times, The Guardian, or any serious national/international newspaper – their costs are much higher. But when you pay for your newspaper, you’re paying for only a small part of the costs – the bulk of any serious newspaper is paid for by its advertising revenue. Take away the advertising revenue and you have a flawed business model for most newspapers – they woulnd’t be able to survive on your subscription.

And when a newspaper/magazine goes online it can reduce its costs to the essentials – the labour required to produce it, and maintain the technological infrastructure of delivery. If the magazine is wildly succesful in terms of readership then advertising should follow, and here’s where the problem occurs.

Online advertising is essentially free, thanks to the major models available ranging from google’s dominant adsense network through to the various affiliate networks available. What publishers are expected to do online is to display a brand prominently to their readers for free. They – in the majority of cases (obviously the bigger a publisher gets, the more leeway they have to negotiate) – only get paid when the reader clicks through the advert.

Imagine a similar situation in the traditional media. A newspaper only gets advertising fees if the customer produces the newspaper when buying a product;  a tv program gets advertising revenue only it can prove that customers of product x have bought it because they saw the ad during their program break.

It wouldn’t fly – not just because of the technical implausability of it, but because it ignores a fundamental that advertisers know only too well. The purpose of advertising is to build up brand recognition – and its a repetitive constant task – the end goal of the advert in a newspaper is not simply to make you jump up like Archimedes, and run to your nearest shop shouting ‘Eureka, give me product x before I explode!’.  The ad men would be delighted if that was your reaction, but they more realistically hope that when confronted with a multitude of choice in the supermarket aisle, you’ll recognise their brand and so favour it. That brand process is being fulfilled by online ads, regardless of the click through.

How to change the model? It’s almost as difficult as changing the free-content model, given that it’s the predominant way people place adverts online. The change certainly won’t come from the advertisers, who are in a win-win-win-win situation. Maybe, instead of the Canute like measure of trying to erect a payment wall around all their content, Murdoch’s minions would be better off using their circulation clout to negotiate realistic advertising fees for placement on their sites – now that would be something useful.

Food for thought:

Free: The Future of a Radical Price

The Ultimate Guide to Google Adwords

The Cathedral and the Bazaar by Eric S. Raymond

You can buy the above books directly from the book depository, for free shipping worldwide

Tags: disadvantages of a free website, establishing an online presence, free content model, google, musicians' marketing tips, online advertising, the new google?