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Free vs. Fee in The Digital Age

One of the most interesting dynamics in the digital world is the interplay between goods and services that you pay for and those you get for free. We've seen free PCs, free software, free Internet access, and free Web sites.

As the maxim goes, you get what you pay for, and almost always there's some price to pay for something that ostensibly is free. That price typically takes the form of substandard quality, more or less intrusive advertising, or compromised privacy.

Still, the ethos of free has a strong tradition and moral underpinning among users of personal computers, other digital devices, and the Internet, and whenever something that was once free starts to cost, a hue and cry can be heard across the land.

The recent announcement that Microsoft was acquiring Skype (www.skype.com) has some of Skype's millions of users worldwide preemptively complaining about the possibility that the software giant may eventually start charging users to make voice and video calls to one another using their PCs, which currently is free (Skype calls to landline and mobile phones carry a small fee).

On one hand, these worries have some basis. Microsoft is paying a whopping $8.5 billion for Skype, making this its most expensive acquisition. Microsoft has more than enough cash for the acquisition, but Skype lost money last year, more than $7 million.

On the other hand, Microsoft has kept other acquisitions free to users, leveraging them to help support the prices of its core products, its Windows operating system and its Office suite of software programs. Here's predicting that Skype will continue to be available separately, for free, while also being integrated into existing Microsoft products.

Another interesting development in the free vs. fee arena is the emergence of pay social networking services that give users more than what they get for free from giants such as Facebook and Twitter. One such service is Ning (www.ning.com), which lets people and organizations create their own social networking site.

Users can customize the look of their site, accept or reject particular types of members based upon profile questionnaires, control what's shared among members, and even optionally charge member fees and incorporate advertising. Fees for setting up a Ning site range from $2.95/month for a "mini" site to $49.95/month for a "pro" site with unlimited members and premium add-ons.

The roiling world of publishing is another area where feathers are being ruffled by change and money. In March the largest metropolitan newspaper in the U.S., the New York Times, starting charging fees to frequent visitors of its Web site (www.nytimes.com) who aren't also subscribers of the paper's print version.

Anyone will still be able to read up to 20 articles per month for free. More than that will cost, beginning at $15 per month. Not all visits are included in the 20-article limit. If you access an article through search sites such as Google or social networking sites such as Facebook and Twitter, that's a freebie, though Google searchers are limited to five articles per day.

The New York Times like many companies on the Web is trying to come up with creative solutions that retain visitors while increasing revenue. In explaining its change, Arthur Sulzberger Jr., chairman of the New York Times Co., said, "The challenge now is to put a price on our work without walling ourselves off from the global network, to make sure we continue to engage with the widest possible audience."

Hard numbers aren't yet publicly available, but one dedicated New York Times reader said that the number of online reader comments about Times articles seems to be down, likely indicating fewer online readers.

As much and as loudly as some users complain about any movement from free to fee, others argue that it benefits society as a whole. In a recent blog post at Open Forum (www.openforum.com), run by American Express, one participant spelled out various reasons he felt that "free is hurting us all."

Free content isn't valued by readers the same as paid content, says John Jantsch, founder of Duct Tape Marketing (www.ducttapemarketing.com), a small business market consulting firm. When content is free, it's more likely that content producers will "simply slap something together." When users pay for content, Jantsch feels there's a better chance for building a loyal community around it.

It's likely that in the future, some digital offerings will remain free. Some, to the delight of many, will become free. But an increasing percentage, it seems likely, will cost.


Reid Goldsborough is a syndicated columnist and author of the book Straight Talk About the Information Superhighway. He can be reached at [email protected] or www.reidgoldsborough.com.

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