‘Free’ as a business model and how it might apply to newspapers

Techdirt has an interesting post this morning on Getting People to Pay for Investigative Reporting Directly. The idea, as reported more fully in the New York Times is that people club together to commission a piece on investigative reporting and pay in advance. Spot.us in San Francisco is offering just this service raising money to write a piece on whether California can meet it’s ethanol demand and to fact check political ads. Once the piece has been written it is up to the commissioning group to decide what to do with it – most likely give it to the newspapers to publish for free to promote their issue, or maybe sell it to one newspaper as an exclusive.

Assuming issues of bias can be worked around then this will be a good example of how business models are evolving to deal with the economics of free in the newspaper world.

Historically the news industry has sold us a bundle which comprised investigative reporting, basic facts (election results, weather etc.), re-hashed PR, ads, and a physical format. The internet has unravelled the bundle and is forcing the individual components to be priced correctly – hence the separation of payment for investigative journalism from content.

In a separate post Techdirt gives offers this framework for the unbundling that is being driven by the internet and economics of free across many industries:

  1. Redefine the market based on the benefits
  2. Break the benefits down into scarce and infinite components.
  3. Set the infinite components free, syndicate them, make them easy to get — all to increase the value of the scarce components
  4. Charge for the scarce components that are tied to infinite components

In the case of news, the scarce components are the investigative journalism and the physical format. The rest – including the content itself – is infinite (in the sense of zero marginal cost to reproduce) and will therefore tend to free over time.

What I like about the spot.us experiment is that it shows the trend towards free doesn’t have to undermine the good things about newspapers, it just means the value chains will need to be recast. Or it will if it is successful. I hope it is.

Incidentally the other interesting thing about spot.us are that it is a market based mass collaboration project. I think we will see more of these.