One of the fundamental beliefs that I but not many others hold, is that all content eventually will be free. After discussing this with more than a few, I figured I’d put down some of my arguments here:
It might not be the most obvious thing, as companies like Netflix and Spotify are making positive headlines almost every week, be it either because they are growing or because they are adding new content to their services. These companies have successfully put an end to piracy and showed there is a willingness to pay for digital content as long as the user experience is good enough, the story goes. And as both businessmen and businesses are entering the competition for distributing paid digital content, it’s natural to think that it’s good business going forward also.
(By digital content I mean text, images, audio and video consumed online; content where the marginal cost of duplicating it is close to zero. While these four categories have different dynamics, stakeholders and current business models, I tend to believe the same thing will happen with all four, but that the when and how will differ.)
Let’s start with the content that typically is least expensive to produce; text. Most consumed text content is already free for end-users, the main reason for this being that the producers of such content struggle to differentiate themselves. Check for instance how many blogs that cover a random top story on Techmeme:
Say that the original story on Buzzfeed was behind a paywall, most users would be satisfied with reading PCworld or Techcrunch’s free and ad-supported version of the same story. This, paired with the fact that ad-supported mass content production is sustainable at large enough scale, naturally leads to Buzzfeed continuing to produce free content going forward.
“But as production time/cost increases, so does the exclusivity, making users pay”, some would argue. “Therefore, both books, videos and songs will continue to generate revenue”, the argument goes. I disagree with this argument, as I have have behaved the opposite way myself.
I’m a big fan of the guys in the video above, and my “ideal music streaming” service would thus naturally have Beatles in their catalogue. This was one of the reasons why I was reluctant to go all-in-Spotify in the early days, and instead ripped songs from Spotify down to my local iTunes collection. But as Spotify upgraded their catalogue, I found it more convenient to build playlists within Spotify – and thus I gradually stopped listening to my local collection (read: Beatles). There’s nothing in the Spotify catalogue that serves as a direct substitute to Beatles, but their catalogue is good enough ****for me to favor Spotify’s convenience over iTunes/torrents’ complete catalogue.
And good enough is the keyword here. Right now, I’m paying Spotify $9,99 every month for access to content, but I increasingly find myself using (good enough) free services like Soundcloud as time goes. This makes me believe it’s just a matter of time before I cancel my premium subscription in favor of free content. I’ll do this even though I might miss some of the content that only is available on Spotify, the same way I miss Beatles now.
And if my behavior is representative for future music listeners, we’ll be a big group finding free content to be good enough. So if you’re a new artist looking for a breakthrough, would you then upload to paid services where you compete with Coldplay and Rolling Stones for attention (and barely make money)? Or would you upload your (good enough_) _music to a free service like Soundcloud, hoping that if it catches on you’ll be able to monetize some other way (concerts, merchandise, product endorsements)? I’m guessing the latter. And as time goes the ripple effect will make more artist publish free content and have more listeners choose the free option.
I believe the future direction of the movie industry will be similar to text and music. No, there’ll never be a direct substitute for Game of Thrones, but in time there’ll be other TV-shows and movies freely available, stealing more and more time and attention from paid content.
“But people still want high quality stuff! Who are gonna pay for that?”, you ask. First of all, I agree that there’ll be demand for high quality stuff in the future as well. There’ll be a demand for (good enough) high quality stuff. And as technology improves, the cost of (good enough) high quality stuff decreases. One could also argue that actor fees are too high, as I don’t think anyone’s entitled 150 MUSD to starr in the Matrix.
Yes, there’ll be costs associated with producing films, regardless of quality. But I’m guessing you’ll see large corporates paying for this. Pepsi, Apple, Nike are already pouring tons of money into commercials and product placement in studio films- and I think it’s just a matter of years before we’ll see them producing their own full-length movies. With free distribution online, a good (enough) movie is a great and maybe not so costly way to do content marketing.
What about mass vs niche
All these mentioned examples revolve around mass content, and you might argue that even if this turns out to be true, it’ll still be a willingness to pay for niche content. I believe there will be a demand for niche content in the future as well, but that the producers will be compensated differently. Let’s have a quick look at two examples of how niche content is paid for today; subscription fees (text) and crowdfunding (music, games, video):
Subscription fees: One of my favorite bloggers, Ben Thomson/Stratechery, has been put forward as an example of someone being able to monetize his (niche) content by charging his readers. He has found his niche, and is now charging some of them for access to premium content. But two things are worth noting:
Firstly, the way he was able to build up his audience (read: paying subscribers) was by first only publishing a lot of good enough free content. If more people did like him, Secondly, he is not building up piles of cash, but rather having an annual income of around $100.000. My guess is that he would make even more by publishing all content freely, and rather charge more for conference gigs, advisory roles etc. The price for his services would probably automatically go up as his opinions would reach broader, making that a better way to monetize.
Crowdfunding: Digital projects will be crowdfunded, but I believe the backers will be more driven/incentivized by stuff like being recognized and getting physical merch than getting exclusive access to digital content. Thus, the content being produced will eventually be free, but backers will pay for other tangible/intangible things that has a perceived value.
Still, none of these things will not happen over night, and whether I’m right we’ll first know in a decade or three. But if I were to put my money somewhere, it’d probably be in Soundcloud and Youtube rather then in Spotify and Netflix 🙂