Free Is Bad
Yahoo has 196.6 million unique visitors each month.
Yet Yahoo generated zero new revenue in 2013.
My opinion: Yahoo CEO No. 6 (in as many years), Marissa Mayer, is hanging on by her fingernails.
Any person with 196.6 million names unable to generate new revenue should seek some other line of work.
What triggered this column was a Feb. 17, 2014 Time magazine story, "THE MAYER EVENT: It's crunch time for Yahoo's turnaround strategy." [See the first image in the media player at right]
The Time MBAs came up with five pronouncements for Yahoo's Road to Recovery:
- Getting Newsier
- Launching a Network
- Powering Your Apps
- Streamlining Its Ads
- Reinventing Search
Not one of these programs asks for money from the 196.6 million users. The business model is all about getting advertising dollars.
Alas, Yahoo Ad Sales Have Been Tanking for a Year
The company's closely watched display-ad revenue, which makes up about 41 percent of the company's total, fell another 5.6 percent even as the overall market grows quickly.—Douglas MacMillan, The Wall Street Journal
It's clear Mayer knows nothing about marketing. Neither she—nor the smartypants MBA writers at Time—have a clue about the technique of making offers, asking for orders, making it easy to order and delighting happy customers.
"People love to be sold stuff," said my first employer Frank Watts.
A Quick History of Paid to Free
When the Internet started to take off in the mid-1990s, the mantra of the kids who started it was "Everything should be free."
I switched from AOL to Yahoo as my email provider in 2005.
When AOL offered free service to its paid members, it lost 12 million paid subscribers and $1 billion revenue a year
In the past 8 years, I have never paid Yahoo a penny. I have never responded to a Yahoo advertiser. I have never used Yahoo for search. I don't read Yahoo News, Sports, Finance, Weather, Games, Groups, Food, Tech, Answers, Screen, Shopping, Travel or ♥♥ Dating.
I am one of Yahoo's 196.6 million freeloaders.
I absolutely should pay them some money.
Over the past 9 years—beginning Nov. 14, 2005—I have sent more than 20,000 emails via Yahoo. Yahoo is archiving these messages (and attachments) in a searchable database. What a huge service I am getting free!
I would be happy to pay Yahoo $12 a year to guarantee continuation of this extraordinary service. Just 25 percent of Yahoo users agreeing to pay this buck a month would bring in $586.8 million in new revenue, which would drop straight to the bottom line.
I would love it if Yahoo hired on some old time direct marketers who know the mechanics of old fashioned merchandising.
I buy a ton of stuff over the Internet. I implore Mayer to make me some nifty offers in the tradition of Jeff Bezos and Michael Dell.
A Quick History of Free-to-Paid in Media
In 1947, my family bought our first television set. In the New York area (as I recall) were seven channels—all free.
That same year, 1947, John Walson Sr., an appliance store owner in Mahanoy City, Pa., had trouble selling TV sets, because reception in the story was lousy. Nearby mountains interfered with his signal.
So Walson put an antenna tower atop New Boston Mountain and ran the wire to his store. The following spring he offered the townsfolk a set-up for $100 and service to his antenna for $2 a month. [See the second image in the media player at right.]
Cable TV was born in 1947 and happy viewers have been paying for this service ever since.
Let's Not Forget Sirius XM
Ever since I can remember, radio has been free. Now you can buy a Sirius XM radio for $79.95 and sign up for one-year of service from $119.88 to $199.00. More than 25 million paying listeners are happily ponying up cash.
Two Examples of When Free Is Bad
1. Pandora. When Peggy works in our home office, Pandora music plays softly over the speakers. Pandora is free if you listen to it with ads (though there is a paid option—ad free—which is available).
How is free Pandora screwing the songwriters whose works are being broadcast?
In 2012, for example, when Pandora's former chief executive testified at a congressional hearing on music licensing, songwriters protested on Capitol Hill. Five writers of hits by stars like Beyoncé and Christina Aguilera showed that 33 million plays on their songs on Pandora yielded just $587.39 in royalties for them. —Ben Sisario, The New York Times
This is the equivalent of government-approved theft of intellectual property. Songwriters—and all the rest of us should be fairly paid.
2. Chris Christie's Bio. A highly-publicized backgrounder by Alec MacGillis on the delicious George Washington Bridge scandal appeared in The New Republic under the title, Chris Christie's Entire Career Reeks.
I downloaded this massive 8,200-word masterpiece of dogged research and writing into my private archive.
I am not a subscriber to The New Republic.
As a writer, I find this appalling—a spike in the eye to author Alec MacGillis and self-immolation by the magazine's owners.
It is also an insult to the magazine's subscribers who had to pay for this story while the rest of the world gets it free.
In bygone times, the author and magazine would be paid additional money for all distribution of the material beyond these first serial rights.
Quite simply, free is bad.
Takeaways to Consider
- "People love to be sold stuff." —Franklin Watts
- If you have a database of folks who know you and like you, make an offer and see what happens. You may be pleasantly surprised.
- "It's the offer, stupid." —Bob Hacker
- "If results are flagging, check your offer first." —Bob Hacker
- "If you want to dramatically increase your results, dramatically improve your offer." —Axel Andersson
- Study great e-commerce marketers—e.g., Amazon, Dell, Netflix—and then steal smart.
- "Steal Smart" does not mean be an imitator. It means come up with a Unique Selling Proposition (USP) and use the best techniques of these masters to exploit it.
- "Imitation is the sincerest form of collective stupidity." —W. Carroll (Bill) Munro
- Use "FREE!" to show a little cleavage. For example:
-Take the first issue FREE.
-Take Volume I FREE.
-Try it for 6 weeks FREE.
-Stop by and take a FREE test drive.
-Take a FREE book for every 4 you buy.
-Buy just $29 worth of wrinkle cream and take this traveling designer bag of perfumes and lipsticks—worth $77.20—as your FREE GIFT.
-Lose the first 5 pounds FREE.
- Charge for the full Monty.
- Always test first.
- "Two rules and two rules only exist in direct marketing. Rule No. 1: Test everything. Rule No. 2: See Rule No. 1." —Malcolm Decker