The End of “Free”

Economist Milton Friedman is said to have first coined the now popular saying “There’s no such thing as a free lunch”.

Of course, what Friedman meant by that is although some things may appear to be free such as “free” health-care, “free” roads and “free” public library — someone, somewhere — always ends up paying the bill.

We now live in a generation that more than ever seems to have totally embraced the word “free”.

A lot of kids nowadays think the only way to get their favorite music is to download it for “free” on the Internet and then sync it back to their iPod.

They might even laugh at those old people still buying old-fashioned CDs and supporting their favorite artists that way.

As for movies, a lot of people think they are so easily downloadable for “free” on the Internet that there is no reason to ever rent a DVD again. At the same time, we all complain that there are fewer good movies being released, and don’t seem to make the connection between the two.

As for the Internet, everybody thinks that everything should be “free” on the Internet, right?

And how dare some companies charge for a service that was once “free”, such as the Last.fm Internet Radio or online newspapers?

More and more, the masses have this sense of entitlement. They want free healthcare, free public transportation, free Internet, free music, free entertainment — and they get angry whenever the “evil” corporations dare to fight back and charge for their work.

In other words, they have forgotten Milton Friedman’s famous saying and believe they can get a free lunch, every single day, all the time.

Unfortunately, there is still no such thing as a free lunch.

Unless artists can earn some money, they will stop making great music.

Unless movie companies can get paid and hire great actors, they will stop making great movies.

And unless newspapers can pay their reporters and staff, they will stop writing great stories.

Companies Are Fighting Back

One of the biggest failures in old industries trying to adapt to the Internet world is the publishing industry.

We all know that newspapers are not like blogs. A blogger can write whatever comes to his mind and call that “journalism”. But true journalism involves a lot more than just writing random posts, and is also much more expensive to produce.

Think of the in-depth articles by Time magazine, or all the research involved to put out a daily newspaper.

When the Internet became popular, most newspapers started publishing their newspapers for free online, in the hope that people would upgrade to their paid services with more features.

But in practice, nobody did that. Why would you pay for essentially the same service you can get for free?

At the time, there were no Kindles or iPads or other device to read newspapers on the go (unless you wanted to carry your laptop everywhere and try to read it that way), so these companies didn’t really have any other option.

They tried to make some money with online advertising, and because a lot of people still read traditional newspapers, they hope to keep their readers faithful by publishing their news for free on the Internet as well.

Now that we have devices able to read newspapers and magazines on the go, publishing companies are still having a hard time to convince people to buy them that way.

When I got my iPad a few weeks ago, and one of the first things I did was to download a copy of Time magazine in an “iPad-optimized” version.

Time obviously invested a lot of money and efforts in turning their magazine into a beautiful, portable, digital version. They didn’t just take the magazine and turn it into a PDF that looks exactly the same.

They built a completely new, intuitive interface and navigation that takes advantage of the touch-screen of the iPad and makes it completely natural and fun to read a magazine on the device.

And for this, they charged $4.99 for one issue of the magazine.

I thought it was a fair deal because I know they have to get their investment back, and also because they cannot hope to earn the same amount in advertising on the digital version as they do with the printed version.

Yet, a lot of people were complaining about this price.
Why would I pay $4.99 for a digital magazine when I can subscribe for one year for just $19.95?

In reality, $4.99 is about the same price you’d pay for at the newsstand, but you have the advantage of portable, interactive interface and instant gratification. Complete with streaming photos and even videos.

But people don’t see it that way.

What companies are now finding is that they are having a hard time convincing people to pay for a service that was once free or really cheap.

Move the Free Line?

Eben Pagan is a very well-known Internet Marketer who is well-known for his concept of “moving the free line”.

What he meant by that is: give your best stuff away for free.

Eben thought that if you impress your audience with great free content, they will more likely want to upgrade to your paid content to get more of what you give away.

Although the concept works to some extent in practice, it can also fail miserably.

I have subscribed to Eben Pagan’s various mailing list and did not personally find that he “moves the free line” that much. Most of his ezines are pure promotions for his products and outside of his big product launches, you won’t find a lot of “free” stuff on his website.

A lot of marketers might be telling you to move the free line but often they don’t even do it themselves, because it just doesn’t work as well as advertised.

One of the worst thing you can do is build your own website by giving your content for free ALL the time, and then try to sell products to your readers after.

Often, they will resent you for it. You will get a lot of hate mail and it will be very difficult to turn that list around.

For example, a friend of mine has a great podcast on raw food he’s been running for a few years.

It’s a true high-quality podcast, and his website is top-notch. He gets thousands upon thousands of downloads per show, and has a decent amount of visitors to his website and signing up for his list.

Yet, in spite of all of this, he’s having a hard-time monetizing that list and he’s not able to give up his day-job yet.

When he tried to introduce a premium “paid” version of his podcasts, his sales were really low.

He found out the hard way that people are not willing to pay for something they were used to getting for free, even if it has more features and perks.

What Should You Give Away For Free?

The question for anyone starting a online business is: what should you give away for free?

On the one hand, you don’t want to just send promotions and come across as a greedy marketer.

On the other hand, you don’t want to attract an audience of freebie seekers that will only consume your free content and resent you for trying to sell anything and earn a living.

I do think it’s beneficial to give away some great content in the form of articles and great videos, but overall these pieces of content are more about building a relationship with your readers rather than actually giving away your best secrets.

You want your readers to feel a personal connection to you and also through your blog posts and video know what you’re about.

But when it comes to delivering your most complete and revolutionary content, the place to do that is within your paid products. If you give away your best stuff, your readers will not even appreciate it as something valuable.

A blog should have interesting news, stories and videos that relate to your topic, but your true “how to solve a problem” content is what you sell.

Another possibility to add to that is to post excerpts from your paid products on your blog. For example, for my Raw Vegan DVDs I posted short, 2-minute excerpts from the DVD series so people could get an idea what it was about, and had great success with that.

The purpose of the excerpts is more to build credibility and being transparent about the quality of your information.

Avoiding Freebie Seekers

One big problem that many people run into is that they build a great list of readers — but nobody buys anything from them because all they are used to is getting free information.

It’s very difficult to transform a list of freebie-seekers into a list of excited customers.

The way to avoid that is to sell from the start.

When your website visitors sign up for your mailing list, present them with your best offer immediately. This is when they are more likely to be interested in buying it anyway.

Give them a great free bonus in exchange for signing up to your list, but also show them immediately that you have some great products to sell — right from the start.

If you don’t have any product to sell yourself, then promote as an affiliate a product from an author that jives with your philosophy.

You might occasionally get some people who complain about your marketing, but it will be far less than if you give away everything for free and then suddenly, a year later, come up with a product that you try to sell to them.

You essentially — right from the start — want to filter out the people who are only interested in getting free stuff, and try to attract the genuine truth-seekers who are willing to pay you in exchange for your hard work and great content.