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    Read for Free, Pay for Print or Stuff

    by Michael Josefowicz
    February 25, 2009
    Flatworld Knowledge applies the "Read for Free, Pay for Print or Stuff" model to college textbooks

    The discussion about micro-payments and “pay to read” goes round and round because it ignores a basic fact. Most people, most of the time, do not read newspapers. They view, scan and search newspapers. Selling words to viewers, scanners and searchers is hard, but since viewers and scanners are always background-searching for stuff they might need, selling them stuff is much easier.

    Appealing to tribes

    Readers can be found in tribes, in the sense used by Terry Heaton at his PoMo Blog
    and by Seth Godin in his most recent book Tribes: groups of people united by a common idea and inspired by a common leader.

    In today’s wired world, tribes can form, coalesce and disband in mere days. When they form, there is an opportunity to sell them words — people fired up over a particular idea will be eager to learn more about it and for that they need words. When the tribe disbands, that big sales opportunity goes away. The best recent example happened during the recent U.S. presidential election, with anything with the name “Obama” on it. Obama supporters, excited by Barack Obama’s eloquence and hopeful for the idea that he would bring change, eagerly snapped up books, newspapers and magazines with stories of the presidential candidate. But that coalition of tribes disbanded after the presidential election; only smaller tribes living in niches remain.

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    So readers will willingly buy words delivered in different forms, but it depends on a combination of price, convenience and timing. Sometimes they borrow books from the library. Sometimes they buy books. Sometimes they will even pay for access to words on the Internet — but more often than not, they balk at paying for words on the web. I think the experience of TimesSelect teaches that even the New York Times doesn’t have enough readers in their audience to make it scale.

    i-a55e96e79f161ad43a3e5e4ef6ada768-fop.jpg
    The New Yorker successfully employed a ‘Read for Free, Pay for Print’ model

    “Read for free, pay for print or stuff,” on the other hand, is a model that can, and does, deliver revenue. There’s already at least one good example of the model working in a stable market filled with reader tribes. The New Yorker magazine currently does well by selling its print edition to a tribe of self-selected readers.

    The New Yorker appeals to a high-brow reader niche. It has arguably the most thoughtful, best crafted words appearing in any mainstream publication and has maintained an unswerving focus on readers, with only one brief interruption that was quickly remedied.

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    A recent Google search turned up the magazine’s online edition, complete with current articles, cartoons, weblogs, audio, video, slide shows, and an extensive archive dating back to 1925. There is no content hidden behind a pay wall.

    In the magazine’s printed version, it sells ads to help other people sell “stuff.” The web edition, on the other hand, mostly serves the magazine’s own house ads to sell its own “stuff.” When I last checked their home page, here’s what I found tucked away in the far right column:

    1) “The New Yorker Digital Edition — The Magazine in your Email First Thing Monday Morning. Click here for a free trial. A special promotion sponsored by Chevron.”

    2) “Give the Gift of the New Yorker.” The click brings you to “47 issues one year for $39.95 or 94 issues $69.95.” And a “Notify your recipient a subscription is on the way.” You can send an e-card with your message, and choose the style you think best.

    3) Then there are seven offerings of New Yorker products and services.

    4) And of course, the ever-present “Subscribe to the Print edition.”

    This all makes business sense because the New Yorker’s target market is made up of readers and people who define themselves as readers. The problem for any other mass market publication that wants to sell words is to find the readers who value the words.

    One side note: The “selling stuff” component of “read for free, pay for print or stuff” is much easier; anyone can sell stuff. For example, Rupert Murdoch’s Wall Street Journal is now selling wine. Most museums and other non-profits have been selling stuff to their loyal fans — on their websites and in their museum shops — for years. PBS.org understands the power of selling stuff.

    Open College Textbooks

    This month, we’ll see the “read for free, pay for print or stuff” model get applied to another market with another tribe: Flat World Knowledge will create Open College Textbooks to cater to “reader” tribes of students in the formal education system.

    In my opinion, this could signal an explosive growth opportunity for journalism, and maybe some newspaper companies, to serve readers who live in the world of K-12 education.

    A September 2008 story at Ars Technica: says:

    Eric Frank spent 11 years in the dead-tree textbook industry, shimmying his way up the trunk to the branch labeled ‘Director of Marketing’ for Prentice Hall Business Publishing, with 160 sales reps flitting from twig to twig beneath. And then he gave it all up to launch a startup
    called Flat World Knowledge.
    His new company’s business model: give high-quality textbooks away for free on the web. It doesn’t take a psychology prof to ask the question, ‘Has Eric Frank lost his mind?’

    A close read of their website suggests that Eric Frank is “crazy like a fox.” Newspapers trying to figure out paid content have much to learn from his system. Frank outlines some of the key points of his company’s strategy:

    1) Read for free, Pay for “things of value to that large market.”
    “We’re giving away great textbooks and making them open because it solves real problems for students and instructors,” Frank says on the website. “In so doing, we are creating a large market for our product. We then turn around and sell things of value to that large market.”

    2) Harness social media in the service of learning.
    “Our books are social learning tools,” he says, “It is 11:30 p.m. A student in Florida is reading online. She doesn’t understand something. She clicks ‘Q&A’ to see if that question has been asked and answered already. Yes? Great. No? She posts her question. It is 11:47. An answer arrives from California. Thanks. Social learning at work. Students will be able to chat live with other readers, take and share digital notes, set up study groups, and even find partners for cross-border projects. They are part of a global community of learners. Or not. Their call.”

    3) Let the user pay, or not pay and take their choice.
    “Some will read online. Some won’t. Some want print books. Some don’t. We’re not smart enough to figure it out. So we won’t. Now there’s a novel idea. Let instructors adopt the best book for their class. Let students adopt the best format and price for them.”

    4) Use the available technology to deliver the right form at the right time at a low cost.
    “We’ll be selling to a lot more of them, and we’ll be doing it for a lot less money (thanks to technology like web-hosted services, XML, print-on-demand, and more). Like we said…just a smarter way to do business. For all of us.”

    “It’s the Print, Stupid!”

    In all the noise about the web, newspapers have overlooked their defensible advantage. They have the intelligence and machinery to print and distribute information faster, cheaper and more accurately than anyone else. Instead of focusing on that strength, most of the current discussion is about how they have to get into a new business in which they have no natural advantage. The notion that they can compete against Google, et al, when stalwarts like Microsoft and Yahoo are having such a hard time just doesn’t make any sense.

    Local advertising for both print and web platforms for local business is a constantly renewing addressable market. As demonstrated by Google’s success in bringing millions of new advertisers into the marketplace, it just needs the right price and an easy way to make the buy and the sell. Serving an underserved renewable market is a predictable way to grow a new revenue stream and to stop the go-nowhere discussion on whether print is better than online or vice versa.

    But, that does not serve the interests of journalism. For journalism to work, it means a constantly growing market of readers, not just viewers nor scanners. And that brings us back to the potential in schools.

    Schools as the Best Place to Start

    Consider what might happen if newspapers focused on fixing education in addition to reporting on it. Instead of looking at education as a “community service,” it can be reframed as a core business strategy. Textbooks are broken. Education needs a radical overhaul. There is simply too much money being spent for not enough predictable results.

    No doubt, once textbooks are redefined in college, the next low hanging fruit is K-12 textbooks. One possible scenario is that the companies now dominating the textbook industry will respond fast enough to do well in the new market. But then again, consider General Motors. The legacy overhead is going to make it very, very challenging.

    I did a post awhile ago about the possibility of replacing textbooks with textbooklets.

    The real problem with traditional textbooks

    We’ve used textbooks in learning for decades, so why change now? The problem with textbooks isn’t that they are too heavy or expensive — it’s that they are too slow. Having come about in the era of mass production, they are a classic example of the dysfunction of “one size produced at one time” that is meant to fit all. The recent proliferation of textbooks products is merely General Motors introducing more and more product lines to serve different niches. But in the process of refining their business, they lost track of the purpose of an automobile.

    Newspapers, on the other hand, are built for speed. They are world class experts in getting information out on deadline, day after day after day. Learning happens on the same schedule, day after day after day. When the content of media — both web and print — are synchronized with the rhythms of learning, it could change the communication ecology of the classroom. (This post might help clarify what I’m trying to say by the “communication ecology of a classroom” and how print can intervene.)

    Teachable Moments

    As every teacher knows, it is impossible to predict when the “teachable moment” will occur. They will also tell you that it can disappear as quickly as it appeared.

    The “financial meltdown” — better described as a reinvention of finance in a global economy — was the “teachable moment” for high school students to learn about how the economy works. The election of President Obama was a “teachable moment” to learn about how American politics work. The “stimulus” (actually titled the Reinvestment and Recovery Act) will produce many teachable moments for quite awhile.

    In addition to the stable revenue that might come from textbooklets, the focus on helping high school kids learn about the news will create incentives for newspapers to keep striving to help all readers learn about the news. Meanwhile, the newspaper companies can keep selling selling ads to local business to sell stuff and harvest the data from their websites to invent more stuff to keep the whole enterprise humming along nicely.

    Michael Josefowicz spent 30 years at Red Ink Productions, a boutique print production brokerage he co-founded which served New York-based design studios and non-profit organizations. He came out of retirement to teach production at Parsons The New School for Design for the next 7 years. He now blogs about print at Print in the Communication Ecology and about the digital printing industry at Tough Love for Xerox.

    Tagged: flat world knowledge new yorker paid content print textbooks
    • Choire Sicha

      What exactly are your metrics for the New Yorker “doing well” by retaining some print content? Do you have any at all? Given that the quarter’s revenue at Conde Nast is down more than the industry-wide average of 24%, and that the web side doesn’t seem to release numbers, and given the current state of extreme strain and cost-cutting within Conde, I have to imagine that you are praising just the ideas of the print/online divide–not its actual success (or, in reality, quite likely, “failure”) as a method of business. That seems irresponsible.

    • So, what do newspapers sell?

    • Choire – exactly!

      And by the way, here’s what will happen with the newspapers by 2015 – http://bit.ly/NOFG2

    • Choire,
      Truth be told I don’t have stats. I will hide, for now behind, just a blogger. Hopefully a reader can supply some specific details.

      Only thing is that Conde’s numbers are no indication of the results of the New Yorker product. There is just too much noise in the data. Overhead, different brands.

      Re: Conde I found this at Seeking Alpha:
      Conde Nast’s “Vanity Fair” magazine also showed a 15 percent page drop, which is partly due to the magazine canceling its marketing supplement “Movies Rock,” which is hurting publications across Conde Nast’s portfolio. And let’s not forget, Conde Nast reduced Men’s Vogue to publishing just two times a year, down from ten.

    • @Jack
      Re: What do newspapers sell?

      1. Local advertising to the ever renewing market of local business.

      2. Information product packaged in whichever way the “tribes” that make up their addressable market will value it.
      eg. The background stories leading up to and continuing on the reorganization of the financial system..in either newspaper or paperback form.

      The background on Afghanistan. Edited collections of the last six months stories, again in newsprint or paperback from, with the full version readable for free on the web.

    • @ hal web guy…
      here’s what I found so far..I’ll keep looking for more..
      From http://www.nytimes.com/2009/02/06/business/media/06mag.html

      “Drew Schutte, publisher of The New Yorker for the last year, became senior vice president and chief revenue officer of Condé Nast Digital, heading the recently consolidated ad sales force for all of the company’s magazines.”

      So I’m guessing that something good was going on at the New Yorker web presence.

      But
      “The New Yorker’s ad pages dropped 26.8 percent in 2008, far more than other Condé Nast titles, and more than double the industrywide decline of 11.7 percent. Financial services ads, a New Yorker mainstay, were among the hardest-hit categories last year.”

      Fair enough. But my hypothesis is that becuase of the New Yorker’s determined focus on selling stuff in addition to ad’s they are somewhat protected from the slowdown in ads.

      To be fair, given that state of my specific knowledge, as opposed to instinct based on impressions, the copy in my post should have read “is a model that seems to deliver revenue.” as opposed to “a model that does deliver revenue”.

      Hopefully someone who has seem first hand details will chime in to help figure it out.

      The New Yorker was operating in the black in early 2008, but not by the end of the year, according to company executives who were granted anonymity because they were not authorized to discuss finances.

    • @Michael Absolutely, but read for free will not last to the extent that it does now (as per my link above). This is why the newspapers are dying; there’s simply too much content available, that advertising alone cannot sustain. This is why newspapers were generally not free in the first place (with admittedly some local exceptions). Check out Daniel’s feeling on this that he posted today:

      http://thenoisychannel.com/2009/02/26/users-will-pay-for-content-and-not-just-itunes/

    • @Hal,
      Your point is well taken in that for some it will be read for free and others it will read for a little, probably a small subscription.

      The Open Textbooks example is free. Free is a disruptive innovation in education and clearly the VC’s who invested the money and the very experienced textbook people running it believe that story.

      I understand that about 10,000 people subscribe to NYT on the Kindle. But they are not paying for content they can’t get, they are paying for the convenience.

      Re why newspapers are “”dying.” My take is that they have always been profitable. They just borrowed too much money in the era of funny money and they got caught, just like most of the Investment bankers in the world and like the folks who speculated on a real estate market that “never goes down.”

      As for Free with some local exceptions, check out http://www.newspaperinnovation.com
      It’s a blog about free newspapers around the world.

      As for “too much content” , I did a post this morning picking up on a post by Martin Langeveld, over at Nieman Journalism Lab. He makes a very good argument that newspapers should stop following the breaking news. I have to say I agree.
      Here’s the post at my blog..
      http://sellingprint.blogspot.com/2009/02/stop-drama-newspapers-should-forget.html

    • @Michael J – Great post, and thank you for the great link to Newspaper Innovation. I agree with a lot of your assessment, but I wonder about your “following the breaking news”point. It sounds great, in theory. But as a product manager, I really am left wondering how people would react to that.

    • My bet is that it would depend on “which people.”

      Newspaper people who grew up in the post Watergate era, won’t see it. “We brought down a sitting President” is their badge of honor. Plus the career incentives are all screwed up. Becoming a talking head or writing the book is the path to fame.

      They are trapped by the heroic vision of changing the world.

      But readers keep voting with their $ and eyes. They are surrounded by breaking news – noise-. With a big event – war, financial meltdown, etc – you can get their fleeting attention. But it disappears as quickly as it appears.

      So the normal reaction of the news/noise is get louder. But when everyone is yelling, who wants it?

    • I saw Eric Frank of Flat World Knowledge speak the other day at the Digital Download conference. I am extremely impressed and am thinking deep thoughts about how to apply this to other print verticals.

    • I trying to figure out how to replace K -12 textbooks with what I’m calling Clickable Print. Since i’m retired I’m not too worried about the business model, but I’m thinking it’s going to be a non profit with affiliate programs to commercial printers.

      If you’re interested please take a look. http://tinyurl.com/m3f97q

    • ppt5551

      I recommend checking out http://www.CheapestTextbooks.com for used textbooks for sale. I saved so much money using CheapestTextbooks and I recommend them to anyone.

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