Felix Salmon recently wrote an article talking about how the New York Times paywall is working because it’s porous. He contrasts that to other paywalled sites who haven’t enjoyed the same success as the Times. As I read Salmon’s article I was thinking less about pourus vs. rigid paywalls and more about DRM’d vs. DRM-free books.
There are definitely some similarities here. At O’Reilly we believe in a DRM-free world because we trust our customers and we believe they value our content enough to pay for it rather than steal it. It would be naive of us to think this philosophy totally eliminates the illegal sharing of content though. We just happen to believe those situations shouldn’t cause you to penalize all your customers. Shoplifting happens from time to time at your local grocery store but that doesn’t mean the store manager should put everything under lock and key.
But it was only when I read Fred Wilson’s follow-up post to Salmon’s article that I realized what other connection this has to book publishing: advertising, sponsorship and other revenue streams. As Fred points out, the Times doesn’t necessarily have to charge for each online page view since they run ads on every page served.
I’m not suggesting we can suddenly give away book content and make the exact same amount of revenue with advertisements. But what I am saying is that advertising and its close cousin, sponsorship (e.g., “This book brought to you in part by…”), can and will play a role in the future of book publishing. Every publisher won’t necessarily experiment with that model but many will.
24symbols is a great example of how this can work. 24symbols offer both freemium (free, ad-supported content accessible only while online) and premium (for-pay, without ads and can be read offline) models. The customer decides which option they prefer. That last point is critical. 24symbols isn’t just serving up free content and hoping that alone will somehow create a successful business model. They’re also offering an ad-free offline option that some number of users will upgrade to. They key is to make the premium service feature set compelling enough that customers want to pay for the it.
Will 24symbols be successful? It’s too early to say (although I’m a huge fan of Justo Hidalgo and what he’s doing with 24symbols; if you missed it, check out his presentation at our TOC SneakPeek from earlier this year). But I’m convinced the future will bring more advertising-based book publishing experiments, not fewer. And as I’ve said before, I can see a future where Amazon offers two versions of many (if not all) Kindle titles: an ad-free version with pricing similar to today’s models and a second one with ads but at a lower price. Amazon has taken the first step with the hardware itself by offering the lower-priced “Kindle with Special Offers.” As Jeff Bezos mentioned in the 7th paragraph of Amazon’s most recent earnings announcement, “Kindle 3G with Special Offers has quickly become our bestselling Kindle.”
Customers are already voting with their wallets and overwhelmingly choosing the advertising-subsidized version of the device itself. These results will undoubtedly encourage Amazon to start experimenting with ad-subsidized content as well.
Services like 24symbols and the Kindle platform are one thing, but the next logical step after that is for publishers to expose more of their content to the major search engines. How long will it be before some of the current New York Times bestsellers are fully and freely readable online with ads? If the stories are good enough and the premium alternative offers a significantly better reading experience (e.g., no ads, can be read offline, includes other features/services, etc.), some number of customers will upgrade, just like they’re doing with Times subscriptions.