The Paid Internet Gains Credibility

As you know I have been a great proponent of the paid Internet for some time now.

I am aware that most people – including Millennials feel they are entitled to a free Internet.

Working with young people since 2004, I know not to discredit or dismiss their disdain for paying for that which they expect to get for free.

You’ve heard me tell you of my own decision to take this site to a paid model this summer. Everything I do is a virtual “lab” to me. So far the work is proceeding that will enable Inside Music Media to continue unimpeded by influence from advertisers or power brokers.

Then, last week I noted that Chris Anderson, Wired Magazine Editor and Chief, launched a new Apple app for Wired priced aggressively at $4.99 per issue.

sold 24,000 iPad apps in the first 24 hours.

That’s $120,000 in revenue in one day keeping in mind that the print edition of Wired only sells about 82,000 single newsstand copies per month and Wired has approximately 672,000 paid subscribers.

Did I mention that Apple’s cut is $36,000 – who is complaining?

But that’s not the big story.

The big story is that Chris Anderson is the author of the book Free which proclaims the paid model dead as a doornail and free content as the second coming of the Internet. Anderson argues that “Freemium” – as I understand it, is the ability to sell paid content to people who already get the milk and don’t need the cow.


They’ve sold premium for years. It’s not a big business – simply an add-on.

Malcolm Gladwell did a review of Anderson’s Free in The New Yorker and he blistered him:

“It would be nice to know, as well, just how a business goes about reorganizing itself around getting people to work for “non-monetary rewards.” Does he mean that the New York Times should be staffed by volunteers, like Meals on Wheels? Anderson’s reference to people who “prefer to buy their music online” carries the faint suggestion that refraining from theft should be considered a mere preference. And then there is his insistence that the relentless downward pressure on prices represents an iron law of the digital economy. Why is it a law? Free is just another price, and prices are set by individual actors, in accordance with the aggregated particulars of marketplace power."

Mel Karmazin, when he ran Infinity/CBS, refused to allow his stations' intellectual property to be streamed for free on the Internet. Everyone thought he was crazy. Now broadcasters give away their online programming for free or for very cheap online ads. That’s no business model.

Jerry Lee refuses to allow top-rated B-101 to be streamed in Philadelphia because music royalty fees make it economically untenable and because in reality so few people actually listen to radio station streams – compared to the terrestrial signal.

Now we see the proponent of “Freemium” suddenly sound like a convert:

“The tablet is our opportunity to make the Wired we always dreamed of. It has all the visual impact of paper, enhanced by interactive elements like video and animated infographics. We can offer you a history of Mars landings that lets you explore the red planet yourself. We can take you inside Trent Reznor’s recording studio and let you listen to snippets of his work in progress. And we can show you exactly how Pixar crafted each frame of its new movie, Toy Story 3.”

The free vs. paid discussion is one that you will want to watch closely because it will present so many opportunities for growth in the media business.

Apple has sold 2 million iPads in less than 60 days – and they are only getting warmed up. If you refuse to go to an Apple store and play with one then you may dismiss a lot of what I am saying here. (Full disclosure: I am an Apple shareholder). If you own one, you know.

The iPad is the new transmitter and tower.

The new cable system.

The new printing press.

And Apple intends to charge rent.

What’s even better is that the marketplace – you know, those Millennials that expect to get everything on the Internet for free – are showing us again and again that they will buy Apple apps in great numbers.

For radio, the growth opportunities ahead are dazzling.

Create new content that is both compelling and addictive in news, music, sports or entertainment and build in social networking beyond Twitter and Facebook and you have a paid item that can be sold as an app through the iTunes store.

Optimize your website for the iPad and you’re in business.

That’s what I hope to do with Inside Music Media and my many commerce interests. Websites are dead as we know them. Instead, live, breathing, interactive and mobile tablet sites will temp consumers to pay for content if that content is unique.

For record labels, paid content is a better growth business than music.

They will learn one of these days to give the music away for free since they have no way of protecting it, but then offer record label-generated private paid sites for artists, genres, localities – the possibilities are endless.

Traditional media holds the advantage going forward if they choose to use it.

They broadcast on terrestrial signals or make music on CDs and downloads, but if they build the future thinking about how to come up with riveting content based on their broad businesses, I believe consumers will pay.

There will always be free content on the Internet – free is a price and it works with advertisers and other incentives as part of a business model.

But so is paid.

Mel was right.

Jerry Lee is right.

And now Chris Anderson has seen the Promised Land.

There is big money in Apple iPad apps for radio and records.

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