The answer is: no one knows. Many self-styled "gurus" and "pundits" -
authors of voluminous tomes they sell to the gullible - pretend to know.
But their "expertise" is an admixture of guesswork, superstitions,
anecdotal "evidence" and hearsay. The sad truth is that no methodical,
long term, and systematic research has been attempted in the nascent
field of e-publishing and, more broadly, digital content on the Web. So,
no one knows to say for sure whether free content sells, when, or how.
There are two schools - apparently equally informed by the dearth of
hard data. One is the "viral school". Its vocal proponents claim that
the dissemination of free content fuels sales by creating "buzz" (word
of mouth marketing driven by influential communicators). The
"intellectual property" school roughly says that free content
cannibalizes paid content mainly because it conditions potential
consumers to expect free information. Free content also often serves as
a substitute (imperfect but sufficient) to paid content.
Experience - though patchy - confusingly seems to points both ways.
Views and prejudices tend to converge around this consensus: whether
free content sells or not depends on a few variables. They are:
(1) The nature of the information. People are generally willing to pay
for specific or customized information, tailored to their idiosyncratic
needs, provided in a timely manner, and by authorities in the field. The
more general and "featureless" the information, the more reluctant
people are to dip into their pockets (probably because there are many
free substitutes).
(2) The nature of the audience. The more targeted the information, the
more it caters to the needs of a unique, or specific group, the more
often it has to be updated ("maintained"), the less indiscriminately
applicable it is, and especially if it deals with money, health, sex, or
relationships - the more valuable it is and the more people are willing
to pay for it. The less computer savvy users - unable to find free
alternatives - are more willing to pay.
(3) Time dependent parameters. The more the content is linked to "hot"
topics, "burning" issues, trends, fads, buzzwords, and "developments" -
the more likely it is to sell regardless of the availability of free
alternatives.
(4) The "U" curve. People pay for content if the free information
available to them is either (a) insufficient or (b) overwhelming. People
will buy a book if the author's Web site provides only a few tantalizing
excerpts. But they are equally likely to buy the book if its entire full
text content is available online and overwhelms them. Packaged and
indexed information carries a premium over the same information in bulk.
Consumer willingness to pay for content seems to decline if the amount
of content provided falls between these two extremes. They feel sated
and the need to acquire further information vanishes. Additionally, free
content must really be free. People resent having to pay for free
content, even if the currency is their personal data.
(5) Frills and bonuses. There seems to be a weak, albeit positive link
between willingness to pay for content and "members only" or "buyers
only" frills, free add-ons, bonuses, and free maintenance. Free
subscriptions, discount vouchers for additional products, volume
discounts, add-on, or "piggyback" products - all seem to encourage
sales. Qualitative free content is often perceived by consumers to be a
BONUS - hence its enhancing effect on sales.
(6) Credibility. The credibility and positive track record of both
content creator and vendor are crucial factors. This is where
testimonials and reviews come in. But their effect is particularly
strong if the potential consumer finds himself in agreement with them.
In other words, the motivating effect of a testimonial or a review is
amplified when the customer can actually browse the content and form his
or her own opinion. Free content encourages a latent dialog between the
potential consumer and actual consumers (through their reviews and
testimonials).
(7) Money back warranties or guarantees. These are really forms of free
content. The consumer is safe in the knowledge that he can always return
the already consumed content and get his money back. In other words, it
is the consumer who decides whether to transform the content from free
to paid by not exercising the money back guarantee.
(8) Relative pricing. Information available on the Web is assumed to be
inherently inferior and consumers expect pricing to reflect this "fact".
Free content is perceived to be even more shoddy. The coupling of free
("cheap", "gimcrack") content with paid content serves to enhance the
RELATIVE VALUE of the paid content (and the price people are willing to
pay for it). It is like pairing a medium height person with a midget -
the former would look taller by comparison.
(9) Price rigidity. Free content reduces the price elasticity of paid
content. Normally, the cheaper the content - the more it sells. But the
availability of free content alters this simple function. Paid content
cannot be too cheap or it will come to resemble the free alternative
("shoddy", "dubious"). But free content is also a substitute (however
partial and imperfect) to paid content. Thus, paid content cannot be
priced too high - or people will prefer the free alternative. Free
content, in other words, limits both the downside and the upside of the
price of paid content.
There are many other factors which determine the interaction of free and
paid content. Culture plays an important role as do the law and
technology. But as long as the field is not subject to a research agenda
the best we can do is observe, collate - and guess.
This article is, of course, free content...:o))
About the Author
Additional articles about Digital Content on the Web:
http://samvak.tripod.com/busiweb.html
http://www.trendsiters.com
Sam Vaknin's eBookWeb.org articles:
http://ebookweb.org.master.com/texis/master/search/?qVaknin