The Best Things Online Are 'Free'
Posted by anastasia on 07-10-2009I just got back from speaking on a panel with two recent college grads and two high school students entitled "Will Anyone Pay For Anything"? moderated by Guy Kawasaki. I wanted to thank the folks who commented on my post earlier this week — I was able to incorporate some of your comments into my remarks. Like any youth panel, these four young people couldn't represent all young people their age, but I did take away some interesting points from the discussion.
Love for Google almost on par with love for Apple
The four panelists were all about gmail and even said they would pay for it if they could no longer use it for free. We know that many young people still mostly message their friends via Facebook, but its gmail where they are alerted to the messages, gchat they're using for chat and yes, even Google Docs. And of course, it all started with search [there have been several studies showing young people prefer Google over Yahoo! for search over the years.] While we can argue about whether Google is making superior products to other internet brands, to these young people, Google is THE brand and is seen as the most "innovative."
Some young people might pay for Facebook if they had to, but not that much. Three out of the four young people on the panel said they would pony up some cash to keep using the service, but it topped out at about $25 a year. Put on the spot, I said I'd pay maybe $30 for an annual sub – more if my business depended on it. The main idea emerging was if they can find a similar service for free, they will, but if their friends are all still there (and decided to pay) or they couldn't find a free version of whatever they have grown to love somewhere else, they'll pay a little.
Banner ads are dead to this audience. They don't click unless it's by accident, and no, fun looking polls that are really ads don't work either. Essentially they are nervous about clicking on anything that looks like an typical banner or digital ad because of spyware or it opening 10 more pop-ups. We didn't discuss homepage takeovers that have been used on MySpace or advertising skins on sites like MyYearbook, but the youth panelists did acknowledge they have passed around branded content or viral videos that are sponsored by or created by brands.
The two guys on the panel admitted they paid for XBox Live but on the whole, this was not a group that paid for that much else in the way of digital content. One panelist had an iPod Touch and admitted paying around $2 for selected downloads, but the rest had phones primarily for voice and text. While they did have ringtones, they either found them for free or made them themselves on sites like Garageband. Like so many other youth panels, apart from the recent grad with free cable and the high school student with Dish, the other panelists watched TV on Hulu or downloaded shows and podcasts from iTunes. We also discussed how you can now "watch" an awards show or sports game by just watching the highlights clips online and following the chatter vs. sitting and watching the whole program.
I think Guy may have been depressed by how little this panel seemed to pay or want to pay for anything online given that his audience was full of entrepreneurs hoping to monetize their digital businesses. But as one woman said to me in the hallway, "I used to get all these free samples of L'Oreal makeup as a teen, and now I spend hundreds on their products." Maybe free while they're young will lead to paying customers later — or maybe that's just wishful thinking…
Categorized under: Web
July 10th, 2009 at 12:00 pm
Free samples of a product, which has what are perceived as real, hard costs is quite a bit different than paying for digital media and access, which are widely perceived as having no hard costs (not necessarily true), or at least no incremental costs (which is pretty much correct). And everyone feels what digital actually does cost is coming down year by year – unlike with physical products.
July 10th, 2009 at 1:32 pm
I would tend to agree with you though it will be interesting to see what happens with journalism and if the forces hoping to charge for it again online are successful this time. Even if they are, I have argued that it should be a free service for students who would later convert to paid content subscribers once they're out of school.
July 13th, 2009 at 10:11 am
No, they're not going to be successful, because the only idea they have is "hey, let's stop giving this away for free and charge for it instead!"
That's not a business plan, that's ignorance of how information addiction works.
If, on the other hand, they organized information feeds by topic and charged a smaller fee for that information (functioning as a tastemaker over a wide range of areas rather than depending on highly-read pieces to support less-read pieces in a more general feed), they would experience more success.
Not wanting to pay for something they're not using is more of a barrier than having to pay for something they like.