Many self-styled “gurus” and “pundits” – authors of voluminous tomes they sell to gullible people – claim to know. But their “expertise” is a mixture of guesswork, superstitions, anecdotal “evidence” and hearsay. In the nascent field of e-publishing and digital content on the Web, no systematic, methodical, or long-term research has been conducted. Since free content does not sell, no one is sure when or how it will sell.
Due to a lack of hard data, there are two schools that seem equally informed. In the “viral school”, vocal proponents claim that the dissemination of free content boosts sales by creating “buzz” (word of mouth marketing) driven by influential communicators. Free content cannibalizes paid content, according to the “intellectual property” school, mainly because it conditioned consumers to expect free information. Content that is free of charge can also serve as a substitute (imperfect, but sufficient) for content that is paid.
Though inconsistent, experience points both ways. Prejudices and views tend to agree that whether free content sells or not is determined by a few variables:
It depends on the nature of the information. People are more willing to pay for specific and customized information, tailored to their idiosyncratic needs, and provided in a timely manner by knowledgeable experts. In general, people are hesitant to spend money on information that is “featureless” and general (probably because there are so many free alternatives).
Depending on the audience, the more targeted the information, the more it caters to a particular group, the more frequently it has to be updated (“maintained”), and the less indiscriminately applicable it is, especially when it comes to money, health, sexuality, or relationships – the higher the value and the greater the willingness to pay. Users who do not have computer savvy skills are more likely to spend.
If the content is correlated with “hot” topics, “burning” issues, buzzwords, fads, and trends – it is more likely to sell, regardless of whether free alternatives exist.
People will buy a book if the author’s Web site provides only a few tantalizing excerpts. The “U” curve. Insufficient or overwhelming free information leads them to pay for content. The same is true if the entire full text content is available online and overwhelms them. Compared to the same information in bulk, packaged and indexed information carries a premium. It appears that if the amount of content provided falls between these two extremes, consumer willingness to pay for it declines.
Moreover, free content has to be free in order for people to feel satisfied. Even if the currency is their personal data, people don’t want to pay for free content.
In terms of frills and bonuses, there seems to be a weak, albeit positive correlation between willingness to pay for content and the availability of “members-only” or “buyers-only” frills, free add-ons, bonuses, and free maintenance.
Subscriptions, discount vouchers for additional products, volume discounts, add-on products, and “piggyback” products all seem to boost sales. Consumers often perceive qualitative free content as a BONUS, which is why it boosts sales.
The credibility and track record of both the content creator and the vendor are crucial factors. This is where testimonials and reviews come in. In the event that the potential consumer agrees with them, their influence is particularly strong. By browsing the content and forming his or her own opinion, testimonials or reviews have a greater motivating effect. The free content encourages latent dialogue between potential consumers and actual consumers (through reviews and testimonials).
The consumer is safe in the knowledge that he can always return the content he has already consumed and receive a refund if they return it. These are really forms of free content. By not exercising the money back guarantee, it is the consumer who decides whether to make the content free or paid.
Information on the Internet is assumed to be inherently inferior, which is why consumers expect pricing to reflect this “fact”. Free content is even less likely to be satisfactory. When free (“cheap”, “gimcrack”) content is coupled with paid content, the RELATIVE VALUE of the paid content (and the price people are willing to pay for it) is enhanced. In other words, a medium-sized person would appear taller than a midget if paired with a medium-sized person.
Price rigidity. Free content reduces the price elasticity of paid content. Normally, the cheaper the content, the more it sells. With free content available, this simple function is altered. Paid content cannot be too cheap or else it will resemble the free alternative (“shoddy”, “dubious”). Free content can also be used as a substitute for paid content (even if incomplete and imperfect). Therefore, paid content cannot be overpriced – or people will prefer the free alternative. In other words, free content limits both the downside and the upside of paid content’s price.
As long as there is no research agenda in the field we can only observe, collect and make assumptions. Culture, law, and technology all play a role in determining how free and paid content interact.
