October 22, 2009

Paid vs Free Content: No debate in my mind

The following link from McKinsey summarizes the opposing views neatly. It's worth reading.

I think the “train has left the station” on this one. The final chapter on “paid vs free” has been written, and paid loses when it comes to content appealing to large segments. I can’t think of the last time I failed to discover a key factoid within a few search queries on Google or Twitter. Incremental cost = $0.

In an strange way this reminds me a bit of running a consumer packaged goods business. Sometimes you know your offer is in a state of decline due to changing fundamentals - Kodak and film - but yet you resist overhauling and self-cannibalization with a better offer such as digital. Reason: you have an asset base that is not easy to transform overnight and can still be "squeezed" until the inevitable happens.

Many years ago I sat in the buying office of Winn Dixie – a top 5 supermarket retailer with 1000+ stores. The film and camera buyer was fuming because in his words “Andy, consumers these days just don’t get it. Winn Dixie does offer digital cameras, but they just don't see it. I have these great disposable cameras that can provide a digital picture. The process is simple: take photos, develop the film and scan the pictures to create files.” Last time I checked these were gone from shelves (and that particular buyer is enjoying his retirement).

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