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March 21 at 11:06am

FREE IS NOT WORTH THE PRICE, Pt 1 of 2

By Ted Hope

Today’s guest post is from filmmaker Michael R. Barnard.  Michael had written to me on Facebook after I had tweeted about the end of film industry trade papers.  I felt he had some interesting thoughts on the subject, and the bigger issue for filmmakers on the “free” economy.  Today’s post is 1 of 2, with tomorrow’s set to look at the inevitable end from the culture’s embrace of “free”.

The New York Times reports on the malaise hitting the very-important-to-Hollywood trade papers, especially Daily Variety. (See online at http://www.nytimes.com/2010/03/15/business/media/15variety.html?src=twt&twt=nytimesmovies)

Daily Variety is suffering the fate of many news publishers (even the New York Times), but attracts attention because of its reactions to its problems. This important trade paper recently fired staff critics, now favoring freelance critics. The paper is also one of the first to duck behind a paywall. You can no longer read the entire paper online free.

Everyone, including me, chafes at this. The news publishers themselves established their value, and the public always perceives value to be the very least it can be. And for years, the news publishers valued their content as “free.”

So how did news publishers like Daily Variety end up in the non-business of giving away their content?

In the mid-‘90s, I had a routine. I would spend 75¢ on a print copy of DAILY VARIETY from a newsstand, spend a buck on coffee, and sit at the Coffee Bean & Tea Leaf on Sunset Plaza studying the industry in Daily Variety and then pounding out a mediocre script, a thriller set in the time of the Northridge earthquake of a couple years earlier.

I liked that life.

But a few years later, the paper and the coffee cost about four times that much. I stopped my routine.

Thankfully, during that same time, the Internet was beginning to blossom into the “Electronic Super-highway.” The Internet existed before those days, but it was populated by geek-esthetes, academics, and government wonks married to the text-based exchange of statistics, data, and reports.

As the World Wide Web began to overlay the Internet, the denizens were outraged by the commercialism. As the first wave of newcomers arrived on the World Wide Web–using their exciting new Mosaic browsers and 14.4 Kb dial-up modems–they settled in to a new and attractive overlay on the free exchange of information that existed on the Internet.

Soon, the original settlers and the newcomers together had something to rage about: paid content. There was a backlash to any attempt to sell information; there was even a backlash to the very appearance of advertising on the early ‘net.

There had been attempts back in earlier days to offer subscriptions via text online. The L.A. Times and the Wall Street Journal offered simple plain-text versions of their papers online for a subscription fee. But they didn’t work. The explosion of the World Wide Web swept those efforts out the door, in favor of “free.”

And people stopped thinking logically. The appearance of cyber-space clouded the minds of many people, leading them to the conclusion that the entire world had become new. It is proven repeatedly that many people cannot discern the difference between cyber-space and reality. (Case in point: several years ago, cyber-space was convinced that Howard Dean was the next President of the United States. Once Dean stepped out into reality, however, the harsh glare of reality immediately shot him down and dismissed him.)

The new netizens and entrepreneurs were swayed by cyber-space, rejecting reality. They conjured up the “we’ll somehow monetize eyeballs” mentality of the Millennial flip, the illogic that had investors pouring millions and millions of dollars into every site that claimed it could “get eyeballs.” They eschewed business plans for generating income, instead chanting the mantra of “We’ll monetize eyeballs!”

And they offered everything for FREE.

News publishers like Daily Variety started with “free” in this environment.

During the Millennial flip, the belief was that, somehow, everyone would get rich. Many did…temporarily, and from investors’ money, not from value. Until reality stuck its ugly nose under the tent and started sniffing around. The Internet bubble burst and its “somehow we will monetize eyeballs” mentality collapsed.

But FREE stuck around. Why? BECAUSE EVERYBODY LOVES FREE. Of course!

We are now feeling the impact of that un-analyzed, self-serving desire, “I want it FREE.”

Yes, the Internet itself must be free. This past week’s announcement by the FCC that it is switching its official support from the old era of broadcasting to the current era of Internet access is welcome and profound news. The Internet needs to be freely available for the exercise of democracy.

But content is a challenge. We want it free, but it cannot be sustained when free.

The Internet has become the dominant distribution system in the world and obliterates the profit streams generated by old-school “analog” distribution systems and old-school “gate-keeper” systems. Those are crumbling quickly, faster than old-world companies can grasp, much less react to.

The mind-set of the consumer must evolve, too.

Of course, we all want everything for free. Of course!

But we must grasp, and are slowly grasping, the old truism, “You get what you pay for.”

If we do not step up and recognize the true value of quality–again, a value that had been set by the news publishers themselves as “free”–then we will eventually, and sadly, recognize that FREE IS WORTHLESS.

End of Part One.  Part Two continues tomorrow with a look at how $1 is still virtually free, and one entity’s good business is a culture’s eventual demise.

Michael R. Barnard is a filmmaker and marketeer living in Hollywood. He is rushing towards pre-production on his indie feature film A FATHER AND SON (http://AFatherAndSon.com)

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54 Comments

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  1. Michael Walker / Mar 21 at 11:06am

    This is so true. Most of the music that I’ve downloaded for free over the years, I would have never paid for. It’s free, so I’ll try it out. It’s all clogging up my ipod now.

    Variety was nice to read on paper back when I was working at production companies who paid for it, but it was never really worth it for me to pay for it. And when it was, I did. I was surprised when they started giving it away, because it used to be really expensive. But everyone was stealing their news anyway, so they had to try something, I guess.

  2. Dennis Peters / Mar 21 at 11:06am

    The irony is I am reading your passionate and well thought out post for free. If duplication costs are (marginal) free and you cannot create some kind of exclusion then the content will most likely end up as free. It doesn’t mean there aren’t other ways to monetize around that content and I think that is where the publications went wrong.
    I share a similar nostalgia for the early 90’s in reading Daily Variety. I used to read the Hollywood Reporter to see who was in production along with Backstage. These kept us informed and I was happy to pay because I had no other source for information. To me, the problem is the magazines didn’t adapt to the new environment. I get better information now, faster and for “free”. The quality of the information exceeds the magazines in it’s depth and you are a part of that solution as I follow you and many other filmmakers on twitter to discover new things the magazines never would have been able to cover. It’s a difficult time to be a content provider whether musician, filmmaker, or writer but I believe it’s not the consumer who is going to have to change but us providers. I know this example has been used ad nauseam but the Grateful Dead figured out “free” 40 years ago. Thanks for continuing this conversation as I know it is a heavily debated topic.

  3. Mike Johnston / Mar 21 at 11:06am

    I agree with the general sentiment of the story and certainly the historical timeline but I’m not sure that the conclusion is entirely accurate.

    Free content is only free in the sense that TV and radio were always traditionally free. All you needed was an antenna and you could get 5 or so TV stations and maybe 10 radio stations that met all of your needs for news and entertainment. Both were totally supported by advertising dollars.

    If you wanted to read you bought a book or newspaper or went to the library to get the same things for free. Video, audio and print media has therefore always been available for “free” for the most part.

    There was enough advertising money to go around because the distribution channels were tightly controlled. Not just anyone could start a TV or radio station. It took a lot of money.

    What the web did was to create a situation where anyone could be a broadcaster to the world in first text and then audio and now video. This is what destroyed traditional media. Anyone could tap into the available advertising dollars via web advertising and as they did the total advertising pie which traditional broadcasters had fed on for so long with no competition was being divided up between more and more people until they just couldn’t sustain their bloated lifestyles anymore.

    Of course very few of the upstart broadcasters are getting rich off web advertising either. Their piece of the pie is way too small to live on. There are just to many of them. But all those millions of small time advertising payouts adds up to a very large amount of money that the big boys aren’t getting.

    That is the situation and it is the people who figure out how to survive and thrive in the current environment who will succeed. Not those who try to legislate or regulate us into a return to the past.

  4. Jon / Mar 21 at 11:06am

    OK. I hear you. But what about the new conventional wisdom that filmmakers should put their films on the internet for free. I suppose the logic there is that people won’t buy a film till they’ve seen it, and indie filmmakers seldom get much of a theatrical release or any marketing worth enough to get them a paying audience. There are indie filmmakers who have shown us that putting their films online for free is what drove sales of their DVDs. When they take down the free version, sales drop. So what’s that all about and how does that model reconcile with what you say here about newspapers?

  5. Mike Johnston / Mar 21 at 11:06am

    Hi Jon,

    I don’t think that giving a film away is worthwhile. I have heard the argument for it and I even did a story for the Filmmaker Magazine blog on a filmmaker trying to capitalize on his film being pirated. In the end though I don’t think that the small percentage of DVD sales justifies a deliberate giveaway. I think that there are better ways to do it.

    It is interesting to consider why watching a film for free leads to DVD sales. It is pretty simple really, impulse buying is always best right after you see something. Bands have known this for years and that is why they have merch tables at concerts selling CD’s, t-shirts and assorted other swag.

    Most bands sell more CD’s at live shows than they ever do online. Does that mean that they should play every gig for free in order to hope for CD sales afterward? No. The venue is making money from ticket sales, drinks, food, etc so why should the band willingly give up their right to a portion of those fees just for the opportunity to sell CD’s and such after the show? Obviously they shouldn’t and neither should filmmakers. I know that filmmakers do the same thing (merch tables) at festivals and such but not many people actively tour films in the same way bands tour and for a lot of good reasons.

    I’ve been working on this issue for a while now and I think that I have some good insights and ideas to offer. I’m going to see if I can present them in a few more blogs on Filmmaker Mag. I think there is a great deal of opportunity out there for indie filmmakers who want to take their film as far as it can go without dumping it into the catalog of a distributor where it will probably go unnoticed for the most part.

    I tried to develop concepts that will work on a small, DIY budget and that utilize commonly available tools on the web and off it. Yes it does take time and work but the potential is there. In spite of all the negative things about the web cited in the story above the internet also offers amazing possibilities to independent artists in the form of tools to put your product in front of millions of people and to manage distribution in various forms.

    Like I said, instead of sitting around bitching about the demise of a model that for the most part excluded indie artists anyway, it is much better to jump in on building a new model in which everyone can share in the available market.

  6. Luci Temple / Mar 21 at 11:06am

    I have to disagree with you here – most newspapers and trade mags don’t sell content so much as they sell an audience: the bigger their readership, the more they charge advertisers.

    The small price I pay for a physical newspaper such as the Sydney Morning Herald doesn’t cover the printing and distribution costs – it’s a subsidised price. When they release that same content online for me to read, it doesn’t cost them a cent for my ‘copy’. They are happy to have me patronise their website, because every visit exposes me to banners and popups that earn them money.

    Daily Variety has chosen to focus more on a subscription model. That is their choice, and perhaps they have to do it if they are unable to gain enough advertising revenue (which I would be surprised to hear).

    However, people’s expectation of “free” content has to do with the fact that we know that they are pocketing advertising dollars based on audience reach, and we endure the advertising because the content is free/subsidised for us.

    Would I be happy to pay $30 for a novel if it consisted of 25% advertising and 40% PR releases? No, I would expect it to be heavily subsidised.

    And if that novel was an ebook with no printing or distribution costs, no ‘retail’ margin, would I be willing to pay the same price as it costs for a physical copy? No. I expect the price I pay to reflect the actual costs, and in the digital world the costs are substantially reduced.

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