Venture Capitalist Fred Wilson blogs on freeing music and how such a business model is evolving.
The fact is that the Internet demands a free business model. It’s a network where content flows freely in abundance. Scarcity works great for physical goods, but crumbles in a digital world.
We learned this lesson in the print world as it moved online in the late 90s. The first instinct of all print media was to charge a subscription to their content in the online world. Today I can think of just one online property that is paid online, the Wall Street Journal. And when it is bought by Rupert Murdoch, it will go free as well. At least I sure hope so.
But it’s also true that many print businesses that have gone after the free online opportunity with a vengeance are making a lot of money now. The New York Times is a great example of this, but there are many more. Online can and should be free because the marginal production costs are basically zero and online advertising is a highly efficient juggernaut that shows no signs of slowing down. Page views are worth a lot more to an advertiser than the amount you can get someone to pay for a subscription to them. And the way media is consumed online, via search and social distribution (emailing links, blogging, etc), requires that the content be free to distribute and consume.