It’s Free (for a Fee)

Amid laughter and jeers from the major media, all sorts of formerly “free” Internet services have disappeared, while dozens of sites have looked for ways to extract hard dollars from their users.

In general, I see nothing wrong with that. Local Internet service providers will be glad to see they have less competition for their regular $19.95-per-month dial-up charges. It’s natural to have an upsell.

But when you start putting a price tag on something that you formerly gave away (and that is supported by advertising), you’re asking for trouble. Slate learned that the hard way. Now Steve Brill needs a lesson.

Brill’s Inside.com recently notified its users it would charge for its news starting July 1. You can pay via a monthly subscription or per story. Brill cited “current economic conditions” for the move. (Oh, will you stop charging when times get better?)

Steve, readers don’t care about your problems. And while insights are valuable, news just isn’t.

But wait, you say, don’t all newspapers carry cover prices? Aren’t all magazines sold by subscription? Yes, they are. But the prices charged don’t cover the cost of newsgathering. They cover the costs of printing and mailing. The costs of newsgathering are borne by advertisers.

There is an exception to this, following what my old journalism teachers called the “inverse square” law of journalism. That is, the smaller the package and the more specialized the news, the more you charge. A big, fat, ad-filled daily newspaper may cost 50 cents. A thin, glossy magazine may cost $4. A tiny mimeographed medical-industry newsletter may cost $40 ($395 per year by subscription).

The more you specialize, in other words, the fewer readers you have against which to earn your costs. A magazine aimed solely at French-restaurant owners will make sure it’s read by most of them (giving the thing away to only the right people) and will charge a higher cost per thousand for its ads than a magazine aimed at cooks in general.

A newsletter, one without ads, aimed at French-restaurant owners will also cost more than one aimed at cooks in general. (It finds the readers by buying the magazine’s list.)

The questions all publishers ask before they go into business are: Who are my readers? How many of them are there? What is my economic model for reaching them?

Brill’s mistake is to go at this question backwards. He seems to have asked what his costs are, then tried to figure out how many readers will pay to cover them.

Here’s a Clue, not just for Steve Brill, but for everyone who creates content, both online and offline. We, the readers, don’t care about you. We don’t care about your problems, your balance sheet, or your costs. We care about us.

The irony here, of course, is that Brill’s publications cover the media industry. But the same questions face everyone in the “content” (also known as the publishing) business. And the same answers remain as well.

You start with the reader: “How many of you are there?”; “What are you like?”; and “How do I reach you?” Then, “How valuable are you to an advertiser?”; and “How important is it that you know what other readers like you don’t know?” You build your economic model from the outside in, not the inside out. (Not the Inside.com out, either.)

It’s about them. It’s not about you. This is true in every business, online and offline. It doesn’t matter whether you’re serving up stories or oversauced veal. Steve Brill may have forgotten that. Don’t make the same mistake.

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