Mogul's rethink could delete online free-for-all

In art, as in commerce, a price tag traditionally has magical powers, conferring desirability on an item that might be thrown away if it was handed out for nothing.

And yet for almost a decade now, quality entertainment and culture, as well as mainstream sources of news, have been freely available on the web. The arrival of the internet has seen musicians, publishers and news organisations all slowly float off together into uncharted waters.

Consumers who have grown up during the past 15 years are completely at home in a world where much of what they want to hear, see or read will cost them nothing. But now may be the time to pay the bill. Chris Anderson, a leading American commentator on the web and editor-in-chief of Wired magazine, puts the matter concisely: "Somehow an economy had emerged around 'free' before the economic model that could describe it."

Anderson's next book, Free: The Future of a Radical Price, will both celebrate and analyse the effect of all this giving-away.

The author of influential 2006 book The Long Tail, Anderson is to suggest that few of the conventional rules of commerce, such as "supply and demand" and "economies of scale", apply any longer.

One of the biggest players in the game has questioned the rationale behind the current give-away culture. Rupert Murdoch, head of News Corp, even went so far as to refer to it as a "flawed" business model when he spoke to reporters in New York.

The media mogul - who owns the Times, Sunday Times, Sun and News of the World in Britain, as well as Fox News and the Wall Street Journal in America - announced that he was considering charging for more of his internet sites.

"We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning," Murdoch said.

Earlier in the week, reports that the Guardian Media Group, the owner of the Observer, was thinking along similar lines had ricocheted around the globe.

For Anderson, the changes that lie ahead are more complex than simply introducing entry fees at a few gates on the web. Free access to entertainment and information is inevitable online, he argues, because there is still unlimited shelf space. People are already making lots of money charging nothing, Anderson points out, and that is because it brings them other things they want.

The dominant force in the market, Google, has now provided so much free that it no longer has to worry whether it will make money. Free information is its very brand and that is why the advertising on its search engines is so lucrative.

But what about the people who are providing the content that is being given away - the artists and journalists? Do they win, too? According to Anderson, yes. He gives the pioneering example of the Prince album that was handed out with copies of the Mail on Sunday in 2007. Although the singer lost money on the deal, his follow-up London concerts sold out.

The newspaper lost money, too, yet its management could put no value on the huge business advantage of being seen as pioneers on the music scene.

It is the music business that has been caught in the web the longest. The future, many believe, now lies in music-streaming websites such as Spotify. Launched last year, the site allows a million European music lovers to select from more than 2.7m tracks. Most fans choose to use it for nothing in return for receiving commercials, but the site also offers an ad-free service for $25 a month.

The fact that a leading site such as Spotify is still searching for traditional commercial traction is a sign of troubled times. Mike Smith, managing director of Columbia Records, believes his industry made a "fundamental error" in letting people think music was free.

"When you listen to streamed music through Spotify, somebody is still being paid," Smith says. "These things are only free as a way of selling their site to you, or their newspaper, or their brand. Unfortunately, a mentality has grown up in our society that believes an album is free."

Smith says high creative standards will lead the public back towards the pleasure of owning an original CD.

Web evangelist Bill Thompson, who helped to design and launch the Guardian site in 1995, acknowledges the difficulty of getting music fans to pay for downloads. But Thompson believes those who can pay will pay, as long as they are getting something faster, better or more easily.

He feels that Murdoch's comments betray the fact that the newspaper magnate does not understand the web. "He doesn't appreciate the dynamic that comes from disseminating information for free and providing data that can be perfectly copied by anyone. This brings the price of content down so low that it is almost not worth charging."

Thompson's view is echoed by fellow web pundit Jeff Jarvis. "Charging for content reduces audience, which in turn reduces advertising revenue. And putting a wall around content keeps it out of the conversation and devalues brands." Observer