$0 vs $500

By now, there's a very good chance that most of my readers are quite bored with my explanations of why it's a Really Good Idea for WSJ.com to go free. But when I read Marek Fuchs yesterday, I couldn't just let his final question go unanswered. So instead I turned to someone with a much greater knowledge of the (new) media business than I have: Chris Anderson, the editor of Wired, and author of an upcoming book called "Free".

Here's Marek's question:

By about 10 to one, the articles I've seen have not examined this central point: When you charge $500 or so for your product under one form of distribution and give it away free as air on the other ... how many people eventually switch?
The question is tantamount to the survival of these companies, since, any way you slice it or cross your fingers, newspaper readers are worth so much more (to advertisers) than online readers. Has anyone ever prospered by giving away the same product they were selling for a lot of money at another place? I can't conjure one up ... but since the business media failed, maybe you can educate me.

And here's Chris's answer:

Marek asks a good question: "Has anyone ever prospered by giving away the same product they were selling for a lot of money at another place?"
Although I'm sure someone has, somewhere, his point is generally well taken. But he's phrased the question wrong. Nobody that I can think of wants to give away in one domain what they sell in another. They want to give away something different.
For example, we at Wired give away what's basically a stripped-down version of the magazine online. We also sell a premium version--an immersive, integrated package of photography, long-form journalism and design, all delivered on a high-resolution medium with infinite battery life and equal indoor/outdoor readability (we call it "glossy paper").
The online version incorporates multimedia, user comments and other contribution, and links elsewhere. The print version, on the other hand, is a visual feast and the only good way to read our longer stories, which don't translate well online at all.
In short, the two products are not the same. The free one is optimized for a medium with near-zero marginal costs. The non-free one is optimized for an immersive visual medium that computer technology still can't touch.
The problem with daily newspapers is that paper doesn't add much value to short-form, non-visual news. Indeed, I think of it as a "value subtract" medium--you get the same news as online, just 18 hours later and with smudges on your fingers. Shifting the audience to a free online version is not such a radical step--after all, most broadcast is "free to air" because the marginal cost of reaching each additional audience member is zero, and it's often said that if you can understand why they sell newspapers on the street in boxes that don't limit how many copies you take, you'll really understand the newspaper business. They're not selling papers, they're selling audiences to advertisers. Online does that just as well.
Anyway, they don't have a choice. The web is a conversational medium, and if you're behind a subscriber wall you're not in the conversation.

I basically agree with Chris here, except I see more value in newsprint than he does. I probably consume more news online than 99% of the population; I subscribe to 348 RSS feeds just for starters. Yet I also subscribe, with my own money, to the print version of the WSJ.

Every morning I leaf through the dead-tree version of the WSJ while drinking my coffee, and I get valuable information that way which I wouldn't get around to reading once I sit down at my computer, check my emails, and jump in to all the different demands of the workday.

The print version of the WSJ is a commuter medium, a morning ritual. People read it on their way in to the office, even if their office is only a few feet from their kitchen counter. Once the day is up and running, no one ever finds the time to sit down and read the paper. For that reason, the paper can't really be replaced by anything online, since almost by definition once you get online you're in that "up and running" state.

In any case, I'd like to take this opportunity to ask my readers a question. Often, here, I link to WSJ articles. Is this an annoying habit which should cease, as much as practicable, because those articles are behind a subscriber firewall? Or do most of you have access to them?