Monday, June 28, 2010

The More You Give Away, The More Your Sell

In yesterday's post I mentioned the strange fact that several studies and real life scenarios have shown the strange paradox of "the more you give away online, the more you sell."

Now comes word that thanks to the General McChrystal story, Rolling Stone sold at least 5 times the number of copies it normally sells even though it's available for free online at and

That's the reason why it's too early to give up on legacy media formats like CDs, newspapers and magazines. Consumers will never buy these in the amounts they previously have (other than an exception here or there), but they will buy them under the right circumstances, like the McChrystal Rolling Stone issue.

What's needed is a reset in thinking. If you think that you'll make the same kind of big bucks that were once made in those businesses, you're living on a false hope. If you think that you can make a business of it with more modest expectations, maybe you've got a chance. The strategy is to keep the costs as low as possible in order to be able to give some away, use it as promotion, and make it up on the subsequent and ancillary sales. That's what the record industry has done since the 30's with radio. Of course, you still need a product that people want in the first place.

Actually, magazines and newspapers have a much greater chance of surviving than CDs, which is a format that will die a lot sooner. Newspaper subscriptions aren't falling at the levels they once were. In fact, a few are even increasing, and people read the newspaper much more in Europe than they do here. If we should ever have a prolonged Internet outage for any reason, newspaper readership and subscriptions would shoot up overnight. Plus, the most in-depth and competent news reporting still comes from the major dailies.

E-readers like the iPad could soon mean a revival for magazines, providing they adapt to the format and charge a reasonable price. And certain high-end specialty magazines still do well.

Regardless, the basic premise still stands. In today's brave new world, the more you give it away online, the more you sell

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FanaticFactory said...

These are some great points. I've often wondered why newspapers and magazines put a barrier to entry like subscription and cover prices. Can you imagine how much more money a newspaper would make if it just delivered it for free to every household in the city? Their circulation would go from 30k to 150k overnight. The money they lost in subscriptions and delivery overhead could easily be made up in ad revenue because they have such a high circulation. Can you imagine the impact if an smaller artist spent a couple of days giving out music to every student at a local college and then played an off campus show? How much would they make at the door and merch? And not just that night, but over the entire course of the fan/artist relationship that they established in those couple of days of legwork...

Will said...

An interesting point is whether this works for selling digital products, since you mention that hard copies sell more with free online versions. Do free online versions sell more online products? I have tons of free youtube videos but don't sell that many paid lessons. Maybe they would buy a DVD of it instead.

Bobby Owsinski said...

Actually, Will. You have it backwards. You sell more digital product online if you give it away for free, but it all depends upon the product. If it's something people really want, they'll pay for it even if it's free.

Internet music star Jonathan Coltan is a great example. When he took his free downloads off his website, his iTunes sales went down.

Cris said...

was there any benefit for the fan to pay for the music than to get it for free from his website?
like higher quality files, or maybe pay-only bonus tracks or anything like that?

Bobby Owsinski said...

Not at first, but I believe so at a later date.


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