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.
Ahh, the holiday season is upon us: People have begun bargain hunting, department stores are donning premature decorations, turkeys are being shot to death, and email inboxes everywhere are being graced with season-appropriate promotional materials so absurd, one might think they were actually written by the clinically insane.
Considering President Obama went and took the Nobel Peace Prize this year (attention hog, much?), Internet Evolution had to settle for a nomination for the second best prize in the world: a MIN Editorial & Design award. And we're happy to say that we won. Big time.
NEW YORK -- Web 2.0 Expo -- Here at the Javits Center in New York City, several industry innovators have come out to take the stage at the Web 2.0 Expo. But some are having a hard time keeping the audience's attention. The culprit? What else? Twitter.
The debate over whether Google is fairly aggregating newspaper content online has been going on for a while, with Rupert Murdoch and News Corp. leading the discourse. Typically it's followed a consistent pattern: Murdoch complains about Google stealing its content to no real benefit to his company, someone suggests hiding the content from Google, and things get quiet on the News Corp. side of the room.
While Google introduces its new Chrome OS (which I'm hearing will be widely available in one year? Did I mishear that?), IBM announced 10 new products today to help companies using IBM System z mainframe technology.
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.
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.
The problem with telepresence is that it's not universally accepted, because video calling isn't. While we can all do video calling, we also apparently worry too much about how we look. If we want HD telepresence in our future, we have to dress down, mess up our hair, and dive into our online life.
A digital content market is emerging. Only two things are known about it: the first is that at some point the Internet will primarily become a paid network. The second known factor is that there are innumerable variables in the digital content market that have yet to be worked out. It’s not known, for example, exactly how users will pay for content (micropayments, subscriptions, bartering of farm animals, other).
Techies have been going crazy over the pending release of Nokia's N900 cellular phone, which incorporates a newly revised touch-screen operating system. Reiter's got one. Is the craziness justified?
Bad news! By eliminating the world’s digital divide we’re likely to create a new divide: the information divide, where we end up creating a two-tier Internet where access to 'quality' content is controlled and charged for by mega-corporations, and the gulf between information haves and have-nots is entirely dependent on how much money they have. This is, of course, an almost exact inversion of the current situation on the Internet – where access is expensive and content is free.
As enterprises leap into the Web 2.0 world of blogging, commenting, and social networking, just 'being there' won't deliver ROI. You may want a 'Web Evangelist' to systematically harvest the feedback in order to polish your product or service.
Good news! The cost of Internet infrastructure, services, and access devices has been plummeting at an accelerating rate over the last 10 years and will approach a point in the next 20 years where these technologies become so fantastically cheap that ubiquitous, low-cost, high-speed networks, storage, and access devices will effectively eliminate the digital divide for most of the world's population.
More companies are trolling social networks to find and vet potential job candidates. Beware the pitfalls of blurring the line between personal and professional lives.
Industry initiatives and government stimulus funds are giving enterprise software vendors a great opportunity to help build out and manage smart grid technologies.
The problem with telepresence is that it's not universally accepted, because video calling isn't. While we can all do video calling, we also apparently worry too much about how we look. If we want HD telepresence in our future, we have to dress down, mess up our hair, and dive into our online life.
The US loses about $20 billion a year on pirated software, movies, and music. But public policy can help stem the tide of digital theft. For example, France has recently passed a 'three strikes and you’re out' law, whereby if after two warning letters an individual continues to download pirated software then his Internet access will be cut off. US policy makers should consider adopting similar policies.
Financial management planning does not need to include Voodoo economics, but it does help to tap into the knowledge base of your team through some sort of real-time system. We explore your options.
When Reiter gets incensed over incompetent Verizon FiOS order-taking and support, he broadcasts it via Twitter. Did it do any good? How should your company offer Twitter support? Watch this for all the answers.
The successor to the BlackBerry Bold 9000 – the Bold 9700 – will be available soon in the US. Is it worth upgrading? Reiter's got one, and offers advice.
Digg
Del.icio.us
Reddit
Email This
TWEET THIS
