May 2011
Ivan Obolensky

Frankly I do not think translations should be free, but then I am biased. I work for a company that specializes in translation.

Digital content seems to be trending in the “free translation” direction. On the Internet, we are now able to acquire digital music and digital books for free, and we can even browse newspapers at no cost. This appears to make a case for the title of a book I saw recently: Free: The Future of a Radical Price by Chris Anderson.

“No cost” content certainly seems to have a future, and if translations simply add cost where there is none to begin with, then why pay for translations at all?

I think this is a fair question.

So, what is the argument for free digital content?

First, just because something costs very, very little does not mean it has no cost. Take a grain of sand. Put that grain of sand with a few billion of its brothers and sisters and those grains of sand cost $13.00 a ton not including delivery.

Manufacturers know all about this. As items are produced in more and more quantity, economies of scale prevail and prices fall. The manufacturer remains in business because he makes up for the sometimes microscopic margin made per item with gigantic volume. Even if it is a transistor embedded on a silicon wafer containing millions of other transistors, each one still carries a cost no matter how miniscule a figure it is. That wafer costs money and its manufacturer, Intel, stays in business because it still realizes more in revenue than the cost to deliver it.

Digital content is no different. It can be considered a commodity just like wheat or water. Each little bit is virtually the same as every other little bit. Each is transported and carried in exactly the same way. Over the years the cost to store content has been decreasing. Just recall the prices one has paid for hard drives through the years. The capacity has increased thousands of times for every dollar spent just in the past 24 months. No wonder the price of content is decreasing.

Through economies of scale and the lower costs of computer storage, the cost to store a single piece of information is now shared across an expanding amount of storage capacity that costs less and less to set up and maintain.

An important aspect of content is that it needs a channel and an infrastructure to carry it from place to place. We cannot receive content without a channel.

Channels usually cost money to set up and function. Even digital downloads of a small size like this article require server space, computers for access, electricity, and on and on in order for it to be accessed and read on the receiving end. This is the infrastructure upon which our digital world depends.

A channel is the way one receives content which can arrive in any number of ways—not just via your computer. Books were the main channel in the old days. If you did not know how to read, your ability to get content was limited; so technology (how to read) is part of the content/channel infrastructure.

A few decades ago, there were broadcast TV and radio. We had to pay for the receiver (the TV) but the channel was free and the content was paid for by advertisers. Only a few channels (thirteen) existed and content was limited since each channel could broadcast only one piece of content (program) at a time. Now there are thousands of channels and oodles of content.

Regardless of the time period examined, one question still remains and is unlikely to change in the future and remains valid even back to the days of Homer: How does one get a channel and its content to pay, become viable to the carrier and purveyor, and wanted by one and all? It’s the most important of all the economic questions.

Even the father of the printing press, Johannes Gutenberg, of Gutenberg Bible fame—and one of the real movers and shakers of the content/channel world—had a problem in this area. He went bankrupt for all intents and purposes in 1455. The acknowledgement of his achievements and an annual stipend came to him ten years later, in 1465, which he enjoyed for a mere three years. He died in 1468. Economics is a thread that runs continuously through this world of channels and content even to the present day.

Economic success has always required innovation. During the twentieth century, movie theaters were able to make money because there were so few of them and they offered exclusive content that interested an enthusiastic public. The Hollywood era was built on the economic achievements of that model. It still works, but with many more competing channels now existing, theater owners and film producers have had to resort to such things as 3D imaging, upgraded and reserved seating, and in-house restaurants to reassert their uniqueness and to justify ticket prices sufficient to pay for the content and remain in business. Film studios have resorted to partnerships with content providers such as Netflix, Amazon and Apple, as well as “location” deals with cities at home and abroad.

Nowadays how does a content provider/publisher compete for the attention of customers and their dollars in a sea of hundreds of other channel options? Direct Sales techniques have always been one way.

In retail, there are several models: The tried and true way is to charge a little and sell a lot and thus becoming the low cost leader, i.e. Costco.

And, there is the opposite strategy: to sell a little while charging a bunch and becoming the high cost leader, i.e., Harry Winston.

My favorite new one so far is the infomercial model: the content is sold and delivered at or below cost and the vendor makes money primarily on the shipping and handling charges, which are often as much as the item itself.

Because economics plays such an important part, sales practices play across all of these models. Often channel providers dangle content as being free in order to entice customers to buy.

There is the “loss leader” strategy and its illegal cousin called the “bait-and-switch”.

In the “bait-and-switch” model, a certain product is advertised at a low price and then it is found to be unavailable and another substituted. “We just gave away, or sold, our last one, but there is another here that is just as good. It costs just a little more,” says the salesperson.

Then there are gray areas:

What about the cell phone that is “free” but only if one signs a two-year contract? The monthly payment spreads the provider’s cost of that “free” phone over the life of the 24-month contract. The phone appears to be free, but not really. We know this, but we are willing to accept that “free” phone in spite of our certainty that there is no way it is free. It’s a promotion after all.

In the loss leader strategy one sells a product at or below cost to stimulate other profitable sales.

An example is a “free” wireless mouse with any purchase of 100 dollars or more while supplies last. It is offered at no cost to the consumer on one hand and paid for by the consumer through sales of the other items being offered. It’s an enticement.

When it comes to digital content it’s not so simple and depends to some degree on which side of the channel one is on. If one is the receiver, it should be free. If one is the originator or publisher, it should cost an arm and a leg.

If digital content is really just a commodity, the continued decrease in price makes sense. If you are a rock star, an author, a director or a producer of content it doesn’t. And this is where the digital and the real world conflict.

Stewart Brand, of the Whole Earth Catalogue and another content/channel mover and shaker observes:

“Information wants to be free. Information also wants to be expensive. Information wants to be free because it has become so cheap to distribute, copy, and recombine—too cheap to meter. It wants to be expensive because it can be immeasurably valuable to the recipient. That tension will not go away. It leads to endless wrenching debate about price, copyright, ‘intellectual property’, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.” —spoken at the first Hackers’ Conference, and reprinted in the May 1985 Whole Earth Review. The quotation is an elaboration from his book, The Media Lab: Inventing the Future at MIT, published in 1987.

The WELL’s (Whole Earth ‘Lectronic Link) sign-on message, “You own your own words, unless they contain information. In which case they belong to no one.”

It is clear that the consumer likes the content-as-a-commodity idea and the creator likes the intellectual property idea. This has created such a cash-flow problem to the music industry that the touring musician is becoming a fixture on the concert circuit and highlights an important point:

The uniqueness of individual performance regardless of medium elicits paying customers while being part of the crowd relegates one to the status of being a commodity.

When it comes to content, achieving uniqueness is difficult to accomplish. Just look at what lengths one has to go through to be a viral video star playing on YouTube.

Viewed as content and commodity, one has a lot of company. Content has blossomed into so much about so many that we need a separate program just to restrict viewing and reading to a manageable level. For instance, a search for all the hits on the single word “content” yields a staggering 3.12 billion entries. How long would it take to browse each one? Almost a thousand years and that’s only at a cursory glance.

As a business trying to solicit customers, this is not just a minor problem. How on Earth in this virtual ocean will one ever be seen, let alone found? As a commodity we are a grain of sand on a beach. How do we solve this?

Do we simply pay Google to push us up to one of the top ten listings in a search and be done with it? Will that even work?

So back to translations and two thoughts:

Being available in more than one language makes content more unique and doubles the chances that it will be found.

It sounds obvious, but it is more dramatic than that. The Spanish word for content is “contenido”. Plugging that into Google yields 194 million hits, or 2.92 billion less than the same search in English. What would be the result of your own favorite tag line in a different language?

If it works well for a second language, will it work as well in another? Being available in several languages increases the likelihood of increased exposure.

So back to the original question: should translations be free?

If translations accent uniqueness, allow one to be found, and open dialogues that lead to new customer relationships, the cost of good translations and localization might be the most worthwhile money ever spent.

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© 2011 Ivan Obolensky. All rights reserved. No part of this publication can be reproduced without the written permission from the author.