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Newspapers go 'Open Core' to survive

The Financial Times is increasingly adopting an 'open core' approach to save its business, much as the open-source world has.

Open source hasn't traditionally been thought of as an innovative force, but based on suggestions that the media industry is borrowing its leading business model, perhaps open source is at least the sexiest nun in the convent.

Whether you're selling software or newspapers, it's tough to get paid in the digital age. This is due, in part, to shifting value.

As Arnon Mishkin, a media consultant with Mitchell Madison Group, suggests, "The vast majority of the value [in news media] gets captured by aggregators linking and scraping rather than by the news organizations that get linked and scraped." According to Mishkin, this sets up an untenable situation where the Googles of the world get rich on the work of organizations like The New York Times...which ultimately can't afford to be "scraped" anymore.

Rather than rage against the digital machine, however, some organizations are fighting back, and doing so with one of the open-source industry's preferred tools: open core.

The Financial Times, for example, is looking for ways to balance free use of its news assets while charging for premium content through micropayments (for individual articles) and subscriptions. The idea is to give away the core of its product to casual readers and charge for more "professional" interest.

It's Zimbra's business model, but for newspapers.

This is the right approach to digital commoditization, rather than the sue-them-until-they-pay approach that the music industry has taken (and which the U.S. Department of Justice appears to condone). Users of digital goods, as Linus Torvalds will tell you, are not parasites or thieves: they're customers waiting to be converted.

The Open Core approach is working very well for the companies that employ it (Disclosure: Alfresco, my employer, increasingly uses this model), and sees various permutations even outside digital goods. The airline industry, for example, is being turned on its head by the discount carriers, which have discovered all sorts of innovative ways to make big business on low prices.

If there's sufficient value, users can be converted to customers. The question is 'how?' Open Core, with its emphasis on both adoption and monetization, seems to offer a compelling answer, whether you're an open-source project or a global media brand.


Follow me on Twitter @mjasay.