This is one of those books that I just seemed to argue with constantly while I was reading it. You know, “Hey, you, book, you’re just plain wrong about this!”
But, as much as I argued with it, as much as I wanted all of the main points to be wrong, as much as I disagreed with many of the details, by the end I grudgingly accepted that Chris Anderson’s Free: The Future of a Radical Price might just have a few very valid things to say about the way the economics of online content is evolving.
This is the Google generation, and they’re grown up online simply assuming that everythng digital is free. They have internalized the subtle market dynamics of near-zero marginal cost economics in the same way that we internalize Newtonian mechanics when we learn to catch a ball. The fact that we are now creating a global economy economy around the price of zero seem[s] too self-evident to even notice. (p. 5)
Briefly, Anderson’s premise is that it will get increasingly difficult to get anyone to directly pay for online content. It’s just too easy to copy it and get around any kind of copy protection or paywall scheme. This applies to newspapers, books, music, stock information, anything. Digital information wants to be free. On the other hand, people who create digital information still want to be able to pay their bills. Anderson goes into great detail outlining how all the different Free business models work, some seem more sensible than others.
The key idea: get over selling content directly. Sell things around the content, like swag or premium services or experiences. The content is basically about building reputation to sell other things.
Of course, he’s too glib and even arrogant about it. After all, he’s editor of Wired and that’s part of his job description. He assumes that everything, every market sector, will follow one rule.
Personally, I don’t think the transition to Free digital business models is going to be smooth at all. Take the music business. Sure CD sales are sagging with iTunes and other digital channels not quite taking up the slack. Sure, the big beneficiaries of touring dollars are the dinosaur acts that became famous and built their reputation under the old music business models. But, something new is emerging. It’s just won’t be as profitable for artists. It’ll probably be a flatter system, with fewer Rolling Stones-scale acts but more that are able to make at least a decent living from constant touring and t-shirt sales. The whole music industry will become more like the Jazz scene has been for the last few decades. Is that good news or bad news?
It’s good news for music consumers as we will most likely pay an awful lot less real money over time to feed our addictions, even when you factor in what we’re willing to dish out for swag, concerts, etc. After all, it’s not like we weren’t going to buy those things anyways.
But, it’s likely indifferent to bad news for music producers. If consumers are spending less, then there’s less flowing around in the ecosystem. More acts making steady but not spectacular money sounds great, but not so much when you consider the average career length in the music business.
And I guess that’s ok. It’ll happen to the book business too, as publishers and bookstores get disintermediated and authors have to chase scarce dollars on their own.
It’ll even happen to scholarly publishing. But that’s another post another time.
The business model in the digital age is essentially about scarcity. Scarcity sells. Who ever controls the access to scarce information can make money selling that information. In the past, publishers controled the scarcity and profited from it. In the digital economy, where’s the scarcity? There’s no shortage of music on the web. There’s also no shortage of text to read. There’s currently a scarcity of the best science information (or at least, what we all assume is the best) because the big publishers and societies control access. But how long can that last? As soon as the real producers (ie. scientists) realize that they’re the ones who really control the scarcity of information, the old edifice will start to crumble. At that point, the scarcity will start to become more explicitly the time of editors and reviewers.
Anyways, I’m going on way too long here. Buy the book, argue with it, deny it, challenge it, find stuff that doesn’t make sense or is overblown, because it’s all there.
Commodity information(everybody gets the same version) wants to be free. Customized information (you get something unique and meaningful to you) wants to be expensive.
Abundant information wants to be free. Scarce information wants to be expensive. (p. 97)
And another, about how his company kept on trying to get people to delete old emails:
The answer is simple: Somehow we got stuck thinking that storage was expensive when in fact it had become dirt cheap. We treated the abundant thing — hard drive capactiy — as if it were scarce, and the scarce thing — people’s time — as if it were abundant. We got the equation backward.
This is a lesson about embracing waste…today’s innovator’s are the one’s who spot the new abundances and figure out how to squander them. In a good way! (p. 191)
As for who I think should acquire the book, library-wise. It’s a no-brainer for business collections and any collection that supports study of the culture or economics of the online world. Most public libraries would probably also benefit from having it, particularly in downtown, bedroom community or business district branches.
Anderson, Chris. Free: The Future of a Radical Price. New York: Hyperion, 2009. 274pp.