Saturday, December 05, 2009

Free vs Freely Distributed by Mark Cuban

June 30th 2009 7:21PM

With the publication of Chris Anderson’s new book Free, the discussion about the role of free, today and in the future has expanded. Articles from Malcom Gladwell in New Yorker, and Seth Godin discuss the various merits and challenges of Free. Is Free inevitable ? Is Free the beginning of the end ? Let me answer the question.

First of all, what we are experiencing right now is “Better Than Free”. The videos on Youtube, magazine articles, newspapers reports, anything that used to be analog that now is digital have a perceived value that is based on their legacy delivery. We value all those TV shows on Hulu highly because we assign a value to what we pay for cable or satellite. We assign a high perceived value to newspaper and magazine reports based on the years we spent paying for them. Anything that we paid for as recently as last year, that we now get free, of course we assign a value of more than free. That makes it worth the effort to find it for free. Because the effort is worth your time. You are getting something for nothing, who doesnt want that ?

Of course that is a challenge for those industries. Not only do they face the challenge of their former customers wanting their content for nothing, but they have the problem that their costs are based upon their ability to sell their content.

There in lies the problem for the free movement. The subsidies of pro content producers from the newspaper and magazine industries will disappear as those businesses contract significantly. What happens then ?

You get the music industry. Anyone can create any song for no cost, and they do. The problem of course is getting your music to stand out among the millions of songs available at any given moment. Its expensive. Very, very expensive. (If it werent for groupies, would the number of musical artists contract 90pct ? )

The future of content outside of the music industry is exactly what you are now seeing inside the music industry. The music industry uses what they have learned from more than 10 years of competing with free. First they cut the size of their organizations to the bone, keeping just those they hope and pray will know best how to guide them through the world of free.

Those survivors have learned or are learning how to identify the music and artists that best fit the new world of free. They learn how to work with the artists and those willing to pay for music in some form, whether CD, Download, Licensing or in concert, and do their best to maximize the return on their investment. They use free as a weapon. They use free as an asset. They use it anywhere they can leverage it into something more. Something hopefully profitable.

What they music industry realizes that they have to offer quite a bit of music for free. What they have learned however, is that they dont have to allow it to be freely distributed. They can and do control where its delivered. You can have it for free, if thats how you want it, but you have to come get it where we want you to get it. On our websites. On websites we co produce with Youtube or Hulu or whoever. If you want it for free, you have to go through the exhausting effort of clicking to our website and giving us something in value in return. It may be your attention. It may be your interest. It may be a referral or your email address. We give you something free, you give us something that costs you nothing.

The music is often free, but it is NEVER freely distributed.

The TV and Movie business are realizing this is the case. Hence TV Anywhere. They will give you access to content for free if you are already a customer of their distributors. And before you IT ALL HAS TO BE FREE BIGOTS EXPLODE, even google requires you have internet access of some kind, which costs you in subscription fees , taxes or coffee.

Newspapers are catching flack for saying there should be copyrights on their news reports and the summaries. They are right. Their work, their ability to control it. They should have the right to control where it appears. If, as Chris Anderson and others suggest, there will be plenty of content creators and the quality of the work is sufficient for consumers of that content, then there will be plenty of open source content and it shouldnt matter what the newspapers request for protection. The market will decide.

Newspapers are also catching flack for saying they dont want their content openly distributed. On this point, they are correct again. They should have complete control over where it is distributed. They should have the ability to choose where it is offered for free.

Not only should they have this control, taking back this control is the exact right business move. Im not saying it will save newspapers or magazines, it wont. But it will make their website offerings stronger in the long run. If Im them, I take the risk that the “printed” content business follows the path of the music industry.

In other words, you take on the role of identifying the best in breed for your business and use your resources to help those talented people figure out how to make money for themselves and for you. You provide your resources and knowledge to make them smarter and then you go and compete against the masses.

In the long run, printed content producers should have a brand, and use their institutional knowledge, their core competencies and ability to procure, improve and market to maximize the value of their brands and the perceived value of their content. Whether its on a central website, a co produced website, in print or on a hologram in the evening sky, I should go to the NY Times because they have demonstrated to me that they have the very best articles on the subjects I am looking for. That they are the best source for breaking news about the topics I care about. THEY NEED TO MAKE SURE I DONT HAVE THE CHOICE OF GETTING IT ANYWHERE ELSE BUT WHERE THEY DICTATE. If they cant make their content stand out from the open source masses and convince enough people to transact with them in a way that makes them money they dont deserve to exist.

They should distribute their content for Free where they believe it maximizes return, but should do everything possible to keep it from being distributed Freely.


This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction
Free: The Future of a Radical Price by Chris Anderson
PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
Dear Malcolm: Why so Threatened? by Chris Anderson
Malcolm is Wrong by Seth Godin

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