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O’Reilly: It Ain’t Easy Being Free, But It Can Work

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When Tim O’Reilly came to New York City last week for the second Tools of Change conference, he warned attendees that “free is more complicated than you’d think.” (He borrowed the phrase from Scott Adams, who wrote last year about his mixed experience giving content away online.) His keynote address was a provocative followup to his speech at last year’s conference about “publishing in a Web 2.0 world,” and one of his first conversational touchstones was a Jeremy Liew blog post about creating a $50 million online media business, with three models that each boiled down to advertising, each presented as almost impossibily difficult. So where’s that leave us?


Since $50 million was comparable to what the book side of O’Reilly brings in, O’Reilly ran the hypothetical numbers on what it would take to generate similar revenues by using ads to support distribution of the same content free online:

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So that’s not likely to get you to $50 million, either. At this point, O’Reilly said, his attitude switched from “advertising works and we’re just not good at it” to “we need to stop thinking of advertising as a model.” Among the alternatives he offered the audience: sponsored content and subscriptions. The latter was particularly interesting from a financial standpoint; O’Reilly’s Safari Books Online, an “e-reference library for programmers and IT professionals,” was already generating 20 percent of the company’s revenue, and was the third largest sales channel, outstripped only by Amazon.com and Barnes & Noble.

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Another solution that fired my imagination centered around the company’s “brand- and community-driven vision,” which led O’Reilly in the direction of events planning—creating communities around concepts like, well, “tools of change” and funding them not just through sponsors but registration fees. But “free” could still be deployed as a strategic tool: The Beautiful Code blog is an example of free content, genuinely useful to its target audience, that is designed to lead readers to a $45 book about the art of computer programming, and even the expensive conferences and journals can be supported by some free content.

Of course, these solutions all depend to some degree on having a very focused mission as a publisher—or, rather, an information distributor, because once you’re getting into event planning you’re past simply publishing. It’s about having a brand that stands for something specific, the way O’Reilly does for computers. But even general-interest publishers can use the strategic distribution of free content to achieve specific goals… particularly if they do it with authors who are seen by their readers as standing for something specific. (See, in this vein, HarperCollins giving Paulo Coelho books away, or Spiegel & Grau teaming up with Oprah Winfrey to give away Suze Orman‘s Women & Money to more than 1.1 million readers.) It’s a slightly different approach than Seth Godin‘s proposition that the book is just a souvenir of the idea… but I don’t believe it’s an either/or situation.

I’ve had my say. What’s your take?

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