A few months ago, we asked Internet Evolution readers whether the "free" model of Web 2.0 is on its way out. Taking the majority, 57 percent said free is here to stay, while 30 percent believe we're headed for pay-to-play.
But evidence is mounting that paid services online are not far off. In a ThinkerNet blog yesterday, Andrew Keen noted that Dow Jones is working on an aggregator, similar to Google News, which will charge users for access to high-quality journalism. (Our readers also professed to wanting to maintain quality journalism online.) With Dow Jones looking to work its way, profitably, into the digital age, and even sites like YouTube whispering of subscriptions, it's becoming quite clear that there will be an end for some of the free-for-all.
And that's just some of the evidence discounting the ideas in Wired editor-in-chief Chris Anderson's latest book Free -- stating that information wants to be, should be, and will be free, since it's cheap to make.
First of all, information doesn't want anything, as it is neither living nor breathing and wouldn't exist without people who think it, create it, and share it. Once we stop erroneously anthropomorphizing this idea of information, we have a real question: Do people want to give away their content and ideas for free?
Maybe they would, in a world where money is as necessary as, say, cotton candy. But in this world, economics dictate that companies and people need to make money to survive.
But he didn't believe it so much when he: a) wrote a physical book which sells for the not-free price of $26.99 (it's worth noting that Anderson is also giving his book away for free on the Web but if information wants to be free so bad, why sell a book at all?); and b) on page 159 of his book, he mentions that he has many more fab ideas he'll share ifffff you hire him as a speaker or consultant. (To be sure, hiring speakers is the quintessential opposite of "free.")
Says Anderson:
You can have the abundant, one-size-fits-all version of the author's ideas for free, but if you want those ideas tailored for your own company, industry conference, or investors meeting, you'll have to pay for the author's scarce time. (Yes, that's my model, too. Speakers Bureau details are on my Web site!)
The theory, then, is this: Half-done, general information, such as the stuff published in books, should be free (except, well, next time, because Anderson's still selling this book). But for specific information, tailored to you, you'll have to pay for it.
This might be an idea worth devoting five seconds of thought to if at this point the reader isn't so disgusted with Anderson's blatant bait and switch. It takes half the book to finally get there, but the reader eventually discovers that Anderson's whole point of writing the book Free is to set himself up for some Expensive speaking and consulting gigs.
So how about a new thesis for that book then, Anderson: "All information wants to be free -- except any that I'm sharing."
I'm on chapter 4 right now (3-hour audio abridged version) and enjoying it. He explains the origin of the "free lunch" and the success of Jell-o, fun stuff.
I think he's a tad annoying (Google Books debate, ugh!) but when it comes to the Internet he has some good ideas.
hey robin.hoover. It's been a good and interesting discussion - so all good!
Not necessarily disagree with you, but I just wanna make a few quick comments here:
- As you know, the marginal cost (MC) is simply a derivative - a cost for producing the next unit. So you're right that once a digital copy of particular content has been created, the MC of distributing the next or last copy of that content is virtually nothing. However, I don't think this is the case for the MC involving production of the next content. So the actual MC, which should normally be lower than a unit selling price, to keep the business running is not likely to be anywhere near zero.
- "...analysis of the behavior of supply and price comes not from value but from cost..." - also almost agree :). in a market, I think cost is almost irrelevant as long as the price offered is greater or equal to the MC - it's the demand that drives the value. That's why I think we can't leave out the demand/value when analysing the supply and price relationship.
- thanks for sharing the link to FREE content.. :)
Find this article very interesting to what we have been discussing on the boards here:Really can't believe that 5 years ago the newspaper industry was making $48.2 billion in print advertising alone compare to Google's entire revenue of $3 billion. What happened within those five years is really breathtaking as this article pointed out:
hi viboons; oops :). i mean no slight to anyone, never an intention, but very often end up falling over my self because i don't believe strong and respectful are mutually exclusive. my bad. :) :).
" ...someone still has to produce and manage the content..."
100% agreement.
Faced with the fact that this digital ontent can be infinitly distributed, the price one can charge tends to zero, zero being the marginal cost of distrbuting the last copy. A situation that is kinda new (10 yrs now?) and a situation that the newspaper industry has been unable to innovate around to be able to pay for the scarce quality they do provide, as well as all associated up-front costs of production.
"... Products are different in values and produced by different suppliers - that's how a supply curve is constructed..."
Almost agree :). An analysis of the behavior of supply and price comes not from value but from cost, or more specifically, the marginal cost of the last item sold. Value is an attribute given by the purchaser/consumer. It's possible to make a ton of money off of the attribute of value, and the WSJ certainly does.
"...And like I said, "free" need not mean "no value"..."
100% agreement.
"...If they can find "value from free", why sell their content?..."
Because that market exists. Because there's only x-number of books published, it's therefore scarce, and thus has a price well above zero, taking into account just as with digital content the up-front and marginal costs of production, manufacturing, marketing and distribution.
It's not about being for or against free, but rather about looking at the economics of digital production and distribution and figuring out how to make money from this hard and fast reality as described by rigorous (not necessarily mine :) ) economic analysis.
This article is really cool. Newspapers, the internet, innovation, denial, disruption, creative destruction, lucid where I'm mostly not. Unfortunately nothing gets blown-up, bummer :).
@robin.hoover: first, I didn't ask "how long ago"; I asked "where".. :) . Look, if you wanted to keep it clean, you shouldn't have brought up the "lack of understanding" of econ-101 in the first place.
Re: "And by infinitely available, I believe we mean that the marginal cost of distributing news is tending towards zero, and therefore one's price for an infinite good also tends towards zero."
- this is where I disagree with you. My impression is that you seem to think of online news as if it were like a physical newspaper and yet you're using the fact that it's digital to explain the infinite supply. The only problem is the marginal cost of distributing content is not the same thing as having unlimited supply (access to HQ content) - someone still has to produce and manage the content. Maybe the only case when supply becomes infinite is when everyone could supply similar quality of content (but not the same copies) anywhere - it would be like you could get a similar article in TIME magazine from, say, People magazine. But that's not the case. Products are different in values and produced by different suppliers - that's how a supply curve is constructed. Yes, you can get news from many sources, but if you happen to want a particular peice of news from the WSJ, for instance, that isn't free, then you'd have to pay. In this case, the supply of access to the WSJ HQ content is "finite".
Just to be clear, I'm not against free online content. I just don't agree that it's free purely because it's digital. And like I said, "free" need not mean "no value". Perhaps, information wants to be free in this Web 2.0 era, but it's ironic and somewhat absurd for those who're trying to make the case for free content by selling their books or ideas. If they can find "value from free", why sell their content?
I find it hard to believe that anyone is willing to give away his work without any reward (I would had said money, but some people don't want money). I might be giving away my content now, but it should be part of my strategy to capitalize on that, later.
Regarding the two-tier model, it has been the approach taken by several companies for a few years now. It seems right, maybe in YouTube's case, offering HD to paying customers, etc.
Pretty much everyone can implement it, just ask a pornography site webmaster to further explain it.
Good Post Nicole. Free...free...fffffFFREE? Not THIS AGAIN!
When are the knuckleheaded Socialists/Hippies/Jolly, toking, smoking, Good time Rock 'n Rollers (not that there's anything WRONG with that) going to admit that Capitalism really isn't THAT BAD?
Things are NEVER free, not even air and water as money is spent keeping air & water clean. One could argue that air COULD be free (if we didn't try to keep it clean). I guess the only thing I can really think of that is TRULY free is solar radiation.
I, too, was impressed by the comment that analyzed Nicoles post and Anderson's book in economic terms. I managed to avoid taking Economics in school, but I have acquired some informal knowledge of the basics. Your analysis made sense, and your examples were good.
Nocole, this is one of the few instances where I find myself in substantial disagreement with you. It's about time--always sharing an opinion can get boring!
To sum up the Abnderson opinion-cum-strategy as I see it (note that I have not actually read the book, only commentary):
information is, and wants to be, free
physical objects such as books have an associated cost, and it's not unreasonable for the author, publisher, and bookseller to take a profit, too
speaking appearances requrie preparation, travel, and time, and it's entirely reasonable to charge for them
giving away an electronic copy of something while charging for the physical copy or a personal appearance is not a bait-and-switch; it's just good business
I am actually rather impressed by the business model Anderson is using and I'll be interested to see how it works for him.
Thanks for a great comment and i really must admit I have not read a succint comment like yours on this forum for a while now. It is too easy and tempting to allow our emotions to get the better of our judgement atimes depriving us of making meaningful contributions to debates like this.
If there is ever a time to be innovative, then I think now is the time. With the constant changing face of the digital landscape, the folks who refused to be innovative and just lean on recycling old and worn out ideas will have exticntion beckoning at them. The two exmaples of innovation you cited are really spot on and it is a real pity that no one is ridiculing the newspaper industry for their lack of foresight and failure to adapt to the changing times. It is not people's reluctance to pay for services that is the issue here but rather for firms to be innovative in carving out a financially stable model for their services. As one person rightly noted, if you want people to pay for sevices, then be ready to be a compelling strong content to show for that. Otherwise, you can still develop a financially succesful model around some free content. The choise is theirs to make and not ours!!
The ThinkerNet does not reflect the views of TechWeb. The ThinkerNet is an informal means of communication to members and visitors of the Internet Evolution site. Individual authors are chosen by Internet Evolution to blog. Neither Internet Evolution nor TechWeb assume responsibility for comments, claims, or opinions made by authors and ThinkerNet bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
We hope you can tune in for an IE Radio interview today with a true industry innovator, Jeff Jonas, chief scientist at IBM. We're talking to Jonas today at 3:00 p.m. ET. Do. Not. Miss. It.
Apple Inc. (Nasdaq: AAPL)'s recent unveiling of its "magical" iPad may have fanboys counting the days until March, but if a recent poll on Internet Evolution is any indication, not everyone is buying into the hype.
We do a lot of grousing here on Internet Evolution, and usually for good reason, considering the amount of nonsense that keeps this industry afloat on its cloud of hot steamy air!!!! But... we can still happily acknowledge those titans who have succeeded in leading the way or paving new ground in their respective fields and, in turn, give credit when it is well deserved.
The Wall Street Journal reports that the National Security Agency (NSA) has been working with Google (Nasdaq: GOOG) to look into the attacks on its Chinese servers.
Smarter Collaboration: How to Thrive in a Challenging Business Environment Market conditions are changing faster than ever, and organizations need to improve their agility and adaptability in order to provide better service and improve processes. The ability to work with customers, business partners, and employees as effectively as possible - while at the same time holding down costs - is a key to success. READ THIS eBOOK
your weekly update of news, analysis, and
opinion from Internet Evolution - FREE! REGISTER HERE
Wanted! Site Moderators Internet Evolution is looking for a handful of readers to help moderate the message boards on our site – as well as engaging in high-IQ conversation with the industry mavens on our thinkerNet blogosphere. The job comes with various perks, bags of kudos, and GIANT bragging rights. Interested?
To save this item to your list of favorite Internet Evolution content so you can find it later in your Profile page, click the "Save It" button next to the item.
BTI sent Steve a card calling him a tool. Unsurprisingly, he’s not happy, and he dons his Martha Stewart hat to show us how corporate holiday greetings should be done.
Mobile TV is everywhere, and yet, nowhere. Nobody uses it – because the handsets aren't good, the pricing is too high, and the coverage is not good enough. But Qualcomm's FloTV Personal TV aims to change all of that.
Research shows that the youth of today like Facebook – but not blogging or Twitter. Does that mean Facebook has won, or just that it's not yet out of favor? Will all the services we see today fade into Ovaltine-or-Wheaties status in just a few years?
What kinds of companies are doing the most innovation in the data center? Turns out it's midtier enterprises that are taking the "Just Right" approach.
Ray Kurzweil's Blio and Apple's iPad tablet will make it easier than ever to have books "read" to us, says Dr. Kim, who believes that talking tablets will become interwoven into our consciousness as we "merge" with the increasingly elegant machines we hold in our hands.
Digg
Del.icio.us
Reddit
Email This
TWEET THIS
