September 19, 2007

Incentive matters

While New York Times' freeing of TimesSelect, and the awaited freeing of, is being written about, I found HotOrNot's return to paid to be as interesting. It is a practical example of the argument I've made that a revenue model where users' pay can be used to drive positive behavior. Making stuff free is not a good thing when it messes up users' incentives to good behavior.

If you buy into Umair's point that with level playing fields quality wins being advertising supported should be a good strategy for quality newspapers like New York Times and Wall Street Journal, as they should capture a larger share of word-of-mouth and search traffic than their competitors by doing so. By going free they, in essence, give their readers' incentive to share an article with a friend or link to it from a blog.

Understanding what behavior you want to drive is key when deciding if you should be getting money from advertisers or users.

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