Chris Anderson, Malcolm Gladwell And A Look At Free
from the might-help dept
Malcolm Gladwell is an interesting guy. He's an amazing writer and storyteller -- perhaps the greatest storyteller of this generation. And, as such, he's amazing at taking complex ideas or research and making it seem simple and easy to understand. I have to admit that I really enjoy reading almost anything he writes for the pleasure of seeing how it's written. That said, I've found his books to be unsatisfying in the end. Great, fun reads at the time, but I kept feeling like I was waiting for more. I was waiting for the actual substance to back up the amazing thesis. It's amusing then, to see him basically suggest the same thing about Chris Anderson's new book, Free in his review of the book in the New Yorker. That review has kicked off quite an online conversation -- with a response from Chris, and other "luminaries" like Mark Cuban and Seth Godin weighing in as well (Godin agrees with Chris, Cuban doesn't).A few people asked me if I was going to respond to Gladwell's review, and at first I wasn't sure if it was worth digging in to it, but at the same time, I did want to put up something of a review of Free myself. So, I might as well kill two birds with one stone here. First: a bit of disclosure: I know Chris. Not well, but we've been known to email and talk on occasion, and we sat down and got lunch a year and a half ago when he was first planning out this book, during which I made some suggestions (some he took, some he didn't) though I doubt my words really had that much of an impact (I'm sure he heard similar things from others, and that they were much more clear and eloquent than I was). Also, Chris does mention me in the acknowledgments section of the book, noting that my daily writings here "informed and inspired" the book. Thus, take anything I say with a grain of salt.
There have already been some attacks on Free that have really missed the point. There are plenty of points to attack, but it seems that the problem is that (once again) people get stopped by the big zero, and forget to keep working through the rest of the details. Like I said last time, it's as if our brains have a "divide by zero" error message that prevents all additional thinking on the subject. Nearly all of the attacks on the concept of free seem to focus on the fact that not everything is free (this is what Cuban does, for example). Except... no one ever claims that everything is free. The whole point is that "free" is simply a part of a larger business model, and the fact that you charge for some stuff doesn't take away from the idea of embracing "free" where it makes sense as a part of that business model.
Gladwell, to his credit, stays away (mostly) from this type of mistake, but he makes a few other ones in the process. For example, in responding to Anderson's recognition of the value of non-monetary rewards as a part of the larger economic ecosystem where some business models involve "paying people to get other people to write for non-monetary rewards," Gladwell's retort is:
That said, it is not entirely clear what distinction is being marked between "paying people to get other people to write" and paying people to write. If you can afford to pay someone to get other people to write, why can't you pay people to write?The answer to Gladwell's question is simply one of economic efficiency. You can pay people to write -- just as Encyclopaedia Britannica does. Or you can get other people to write for non-monetary rewards -- as Wikipedia does. The latter is a lot more efficient a solution, and the difference in productivity and output is quite evident. It's not saying that there is no business in paying people to write, but it's a very different business than the indirect business model, and it's the economic efficiencies that come into play.
Money, at times, is a transactional lubricant. It helps us make transactions faster than bartering three pigs for two trees, a goat and a bushel of corn. At other times, though, money can be friction. It can limit transactional effectiveness by acting as a kind of crutch. That's where non-monetary benefits can suffice (or do a much better job) in rewarding people for their actions. In those scenarios money gets in the way and actually makes a transaction less efficient.
A more efficient solution is a good thing. It helps enlarge markets, increase productivity and make the net of society better off. Much of what Chris discusses in the book is that end result. The process may be messy, but economic growth through efficiency is undeniably a good thing -- and Gladwell seems to miss that point entirely.
That said, Gladwell's comment actually does bring to light my biggest complaint with Anderson's book. I think it's a fantastic read, and quite educational and (at times) thought provoking. But I don't think it goes far enough in diving into the meaty details, which is where folks like Gladwell are led astray. So while I think that Anderson is correct, I'll also say that Gladwell is correct in suggesting that Anderson doesn't clearly answer that question. That doesn't mean that Anderson cannot or that the failure to answer that question means that Anderson's thesis is wrong, even though Gladwell implies the failure to answer such questions calls the entire work into question.
My second issue with the book is related to this, in that while it outlines why "free" is so important and how it's being used and how it plays out in other areas, it really doesn't explain much of what to do about it. This, too, is echoed in Gladwell's questions. He feels that there should have been more about how do you actually apply such things -- and I agree that the book comes up short here as well, though I believe it is on purpose. It lists out examples and business models that are certainly useful to read about, but does little to suggest how you actually apply them. This is speculation on my part, but I remember in our discussion before he started writing the book, Chris explained his goal was to make the book more descriptive than prescriptive, recognizing the difficulties in making a prescriptive book on a topic where there are so many other factors that it's often difficult to outline specific prescriptions. I recognize that challenge, but it does leave the book open to many attacks from people who read it and are left saying "ok, but what do I do about this?" On that, I think the book comes up a bit short -- though, it should provide plenty of consulting fodder for Anderson (and other consultants who jump on the bandwagon, probably without understanding it too much).
The big problem here is that not only will people among the critics misinterpret the lessons of the book, but so will businesses. They'll implement bad business models that have "free" as a component, but that won't be economically sound. No one claims that "free" solves everything, but some will undoubtedly interpret it this way. Then, when they fail, they'll blame "free" and claim that it was wrong, rather than the fact that they implemented a bad business model. This, in fact, is what happened in some areas with The Long Tail, Chris' earlier book. They assumed it said stuff it did not, and then got upset when their improperly created business models failed.
From there, however, Gladwell then goes on to bring up some other criticisms that don't pack much of a punch. He knocks Anderson for using YouTube as an example of using "free" as a part of a business model, noting that YouTube is losing money (though, Gladwell relies on debunked numbers to assert those losses). Similarly, he talks about how the WSJ can charge, Apple can charge for iPhone apps, and cable TV can charge -- but his mistake here is taking a static picture and (often) removing the context. The WSJ can charge, but there are questions about whether that strategy really can last -- and the publication has been opening up more and more stuff as "free" to try to draw people in to that subscription model. The Apple example is quite misleading as well. Estimates suggest that Apple makes very little on iPhone apps, but has really nice margins on the iPhone.
But beyond shoddy research by Gladwell, the bigger issue is not recognizing the dynamic nature of these things at work. Using a little game theory economics wouldn't hurt. By looking at how business models play out when goods have a marginal cost of zero, you quickly learn how opportunities to be more efficient via a well-placed use of free expands the size of certain markets. The trick is recognizing that things that are "free" stop being products that are sold, and become resources -- inputs -- into other products... for free. Thus, you get markets where increasing marginal returns carry the day, rather than diminishing marginal returns. This seems especially odd, given that Gladwell's claim to fame is his ability to pick up on trendlines. To then look at Chris' book and compare it to a static picture of the world is quite unconvincing.
Furthermore, it misses the main point of the book: which is that competition happens, and when it does, price gets driven to marginal cost. You might not like it. You might wish it didn't happen, but arguing against the fact that it's how markets work is like arguing that the sun won't rise tomorrow. No one said that it didn't make economic sense when other businesses had margins squeezed. Yet when that big "zero" shows up, people seem to forget that it's just a number and the basic lessons of the book aren't new or radical -- but the same economics we've always known. It's just that it's applied to markets where marginal cost is zero, something that's become more common thanks to technology.
Gladwell's review, then, does Anderson's book a disservice. It criticizes it because it doesn't answer questions the book didn't set out to answer, and then attacks the picture today without acknowledging the trendlines and the direction that they're moving in. And, finally, it ignores the actual nature of the argument (this is happening) with a moral discussion (is this good?). That's unfortunate. Where Chris' book shines quite frequently is in laying out these trendlines clearly and in a way that will get you thinking. It may not answer all the questions about free, but it should certainly help those who don't stop thinking at the zero to at least recognize the trendlines and get them thinking about how to deal with them. And that is, unquestionably, a good thing.
As Chris did with The Long Tail, he's taken complex economic theory and made it easy to understand in a compelling and highly readable format. While my own personal complaint (above) concerns how much of that economic theory may have been left on the cutting room floor, that's a critique that probably only applies to folks like myself who spend way too much time reading, talking and thinking about these issues. I'm guessing the mass audience this book is targeted for doesn't care so much about understanding the deeper economics, even if it answers the basic questions raised by Gladwell. If you read Techdirt frequently (and enjoy it), then you're quite likely to enjoy reading Free. It certainly complements and adds to the material we write about here frequently, and presents it in a great package.
That said, I've discussed at great length my position on "plagiarism" in the past -- and, amusingly, much of it is inspired by Malcolm Gladwell's own discussion on plagiarism, where he recognized that someone taking his own work and adding value to it and doing something different wasn't such a bad thing after all, and that it could actually represent an inspiration. So if I were actually "plagiarized" by Chris or anyone else (and I don't believe I was), I'd actually find it something of an honor to have my works as a part of something better and more interesting. I don't think it takes away from the quality of the overall work at all. I would have preferred that such mistakes in attribution did not happen, mainly because it's a distraction, but the issue is a minor one. If Chris can take the works of others and make it into something more valuable, aren't we all better off because of it?
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Filed Under: business models, chris anderson, economics, free, malcolm gladwell
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Cue...
1) You cant make money on FREE! Waaaaa
2) You are just advocating everything should be FREE! Waaaa
3) You cant compete with FREE! Waaaaa
4) If everything is FREE, no one will create anything new anymore! Waaaa
There, now that that is out of the way, you people can stay away and STFU and we can have a meaningful dialogue on the topic of how to USE free as a PART of your business model.
(See also: Radio and TV as existing examples of how to leverage "free" and still make money)
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Re: Cue...
For the Theater that played it in, in pop corn and soda sales.
In merchandising for G. Lucas
In ad revenue for TV stations
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don't pass the culture of the web "free" collection plate
Anderson's idea isn't new, isn't revolutionary...it isn't even his own. But he's *Chris Anderson* He's the editor of Wired. He's an important 'prophet' of these things and knows more than the rest of us.
It doesn't matter that he's telling all us the future of content is Free - because his isn't. (the Magazine he edits, the books he sells)
You can say, "that misses his point," but does it, really??? Does it miss the point when a religious/motivational/spiritual author doesn't live how he writes and tells others at church (or in this case expensive conferences or book signings?) to, 'do as I say, but not as I do?'
After all, there is very little statistical or quantifiable data to back up the 'economic' (marketing) theory asserted here...Although there doesn't need to be since it's kind of obvious to all of us isn't it?
I've heard others in the blogesphere say the intention of books like this isn't to prove anything, but to 'create culture.' Well that's nice of him.
Ask yourself too, what kind of licence does this work carry? The passages taken from Wikipedia were under the CC 3.0 one. Taking them, let alone not citing them, violated that 'Free' licence.
If Anderson gave a damn about 'free culture' he wouldn't have stolen from it for profit without credit. Period.
The problem with 'citizen journalism' is doesn't call bullshit on the cool kids in it's clique. 'Social' Media and Journalist objectivity are all too often very are opposing ideals. I'd (and others) would rather pay for the latter, than have it morph into the former.
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Re: don't pass the culture of the web "free" collection plate
And, actually, if you read the book, you'd see that he doesn't claim that it's new or revolutionary, but thanks for making it up!
It doesn't matter that he's telling all us the future of content is Free - because his isn't. (the Magazine he edits, the books he sells)
Once again, try reading. You're making the same fallacy I pointed out in the actual post above. Nowhere does he claim that everything needs to be free. It's about recognizing what should be free and what shouldn't. Scarce goods (books, magazines) don't make sense as free. You are arguing something that Chris' book doesn't say. That doesn't make you look credible.
You can say, "that misses his point," but does it, really??? Does it miss the point when a religious/motivational/spiritual author doesn't live how he writes and tells others at church (or in this case expensive conferences or book signings?) to, 'do as I say, but not as I do?'
But, um, he is doing as he says. You (who clearly have not read the book) are guessing at what the book says, and then thinking he disobeys that. He does not.
After all, there is very little statistical or quantifiable data to back up the 'economic' (marketing) theory asserted here...Although there doesn't need to be since it's kind of obvious to all of us isn't it?
Actually, there's an awful lot of statistical data. But, again you appear to not have read the book.
Ask yourself too, what kind of licence does this work carry? The passages taken from Wikipedia were under the CC 3.0 one. Taking them, let alone not citing them, violated that 'Free' licence.
Yup. Though, to be fair, when he copied them Wikipedia was not yet under the CC license. As I said, this is quite disappointing. But it does not change the quality of the actual work.
If Anderson gave a damn about 'free culture' he wouldn't have stolen from it for profit without credit. Period.
How do you figure? First, you seem to have confused plagiarism with stealing, which is odd. Second, I'm not sure why believing in free culture means you need to credit. That may be your interpretation, but it does not mean one necessarily comes from the other.
The problem with 'citizen journalism' is doesn't call bullshit on the cool kids in it's clique. 'Social' Media and Journalist objectivity are all too often very are opposing ideals. I'd (and others) would rather pay for the latter, than have it morph into the former.
Odd. I'm not sure if you've actually been reading around, but there are plenty of critiques of Chris' work -- and I even explained many areas where I found it to fall short. The problem, though, is you seem to be attacking stuff that the book simply does not say.
I'm not sure how that makes much sense, other than it suggests you don't have much of an argument against what's actually in the book.
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Re: Re: don't pass the culture of the web "free" collection plate
As far as the rest, I'm not going to waste the time with semantics. He fucking copied off wikipedia and other sites verbatim without even a 'nod' - That's literary THEFT. If you want to pay for it, fine. He shouldn't tell me, the rest of the content world, and all those fanboys to give away theirs, if he isn't!
and that's exactly what he's doing - and making a paid living at it too.
I'm calling bullshit on Anderson (not you) for being a hypocrite. The whole thing, IMO is a waste of time and a joke. I'm just tired of claptrap (not that I'm calling your post that, but your reply is slipping into it.)
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Re: Re: Re: don't pass the culture of the web "free" collection plate
You claimed that there wasn't data to back up the thesis. That's wrong. Not all of the data is in the book, but it does exist. My complaint with the lack of "meat" is not the lack of data, but the lack of explanation of what that data really means.
As far as the rest, I'm not going to waste the time with semantics. He fucking copied off wikipedia and other sites verbatim without even a 'nod' - That's literary THEFT. If you want to pay for it, fine. He shouldn't tell me, the rest of the content world, and all those fanboys to give away theirs, if he isn't!
Theft means something is missing. Infringement means something is copied. Plagiarism means something is copied and credit is not given. What he did was not theft. It's not semantics. It's an important distinction if you want to have an honest discussion.
I'm calling bullshit on Anderson (not you) for being a hypocrite. The whole thing, IMO is a waste of time and a joke. I'm just tired of claptrap (not that I'm calling your post that, but your reply is slipping into it.)
It's a waste of time and you haven't read it? How do you know?
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IMHO, Chris is also going what he did with Long Tail: Spotting a moment in time trend, and attempting to backfill justifications.
Some of Chris's own examples (such as ad supported) have gone down the tubes with the recent economic downturn, the magazine he mastheads being one of the biggest losers in the ad market (and the only huge loser to have survived so far). He also seems to do the old marketing trick of sticking a "NEW!" label on something when in fact it is the same crap in a new sack. Ad supported is as old as media itself, it isn't a new idea. There have been plenty of free newspapers / weeklies out there for 30+ years, so ad supported isn't exactly news.
I have sort of ripped it all apart before, and I certainly say that Chris Anderson has one skill: ability to spot a fad or trend and backfill data to support the idea long enough to sell a book.
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You should tell this to the folks who don't believe it.
I completely agree with you. Free is not new. And it does work.
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You might want to try reading the book before making such claims. You would then realize how silly what you say above sounds. All it demonstrates is that you have not read the actual book *and* that you did not take heed of what I wrote in the post above: that just because some apply a business model poorly it does not negate the economics at play.
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"just because some apply a business model poorly it does not negate the economics at play."
Agreed, but taking a operating concept as old as the newspaper (your favorite buggy makers) and trying to brand it as new isn't very useful.
I also wonder: How come you don't run the stories about the free concerts (like the Virgin Festival show(s) that ran for free?)
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There will be free copies available. That's been made clear. I'm not sure why folks like yourself keep pretending there won't be...
Agreed, but taking a operating concept as old as the newspaper (your favorite buggy makers) and trying to brand it as new isn't very useful.
Again, no one did that. Why bother making up strawmen when you clearly haven't read the material.
I also wonder: How come you don't run the stories about the free concerts (like the Virgin Festival show(s) that ran for free?)
We get about 100 submissions a day on stories. Can't write them all up. A free concert by itself is not particularly interesting. So I didn't write about it. I know you seem to think it proves something, but for the life of me, I can't tell what, other than that sometimes people want to put on a free concert to promote other stuff. Good for them.
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You give away the music for free to promote the band and make the concert tickets more in demand (bigger fan base) and the money lost on the music sales is recouped by bigger ticket sales - or at least bigger demand of people willing to pay money to see the band live.
But what happens when concerts are free? Do bands end up just on the payroll of "Virgin promotions inc" playing only virgin "free" shows that virgin turns around to use to promote their products? What happens to the bands that don't? Do they get treated like Metallica did fighting Napster? Are the people charging for concerts suddenly seen as some sort of criminal?
All I am looking at is applying your same process on recorded music to live music. Where would it end?
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Heh. And, once again, you apply it wrong. I don't think free concerts are a good idea and I've said so. A concert involves scarce goods and giving those away for free don't make sense long term. But as a one time promotion, it's fine.
If we see a trend of everyone offering free concerts that's different.
But don't falsely claim you're "applying the process" to free concerts. If you were actually applying what we talked about, you wouldn't offer free concerts beyond a single promotion.
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Do you feel that there is some way to STOP free concerts? Is that process any different from free music? If the masses choose only free concerts, in the end isn't the exact same as your point about the masses choosing free music?
I know it doesn't agree with your world view on it, but have you truly considered the implication of "cascade runaway free"? Do you think you can stop it only because you like this version and not the next version?
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Limited seats + Uniqueness of each concert = reason to pay.
Static digital recording + unlimited repoducable copies = great promotional tool.
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Remember, you call it a reason to pay today, but what happens when all your favorite bands have come through town and played for free?
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I do like your example of Woodstock, though, because, you know, you had to go 40 years back to get an example...
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Oh yeah, and the move was approved and touted by Richard Branson himself, someone I sort of think might know a thing or two about marketing and business.
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Oh yeah, and the move was approved and touted by Richard Branson himself, someone I sort of think might know a thing or two about marketing and business.
I'm not sure what you're arguing here. If you can support it with subsidies from advertising -- as apparently they are -- then that's great.
It's just that advertising alone is a limited opportunity when you're using it to fund a scarce good. I said -- I thought clearly -- that using it for promo purposes on a small scale is great, but it doesn't scale.
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It isn't how YOU feel about what they are doing, but what do you think the real implications could be? Free concerts would aggregate a ton of eyeballs, get people to a single place maybe for a whole day. Up the price of beer and hotdogs an extra 50 cents, use the event to market your expensive airline and cell phone company, go all lifestyle, and the concert is free.
Heck, get a few local sponsors in each city (the usual mix of radio, TV, etc) run a few contests for VIP backstage stuff, and you could get near wall to wall coverage in every city you play.
So instead of the 10 festivals that come through every year being $50 a ticket, all of a sudden they are free, double the size, and still making money.
Can you imagine it?
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Who has ever, EVER suggested this as a repeatable, sustainable model? Ever? Because I would tell them they're crazy. However, saying that we shouldn't believe in the advocacy of Free! for unlimited goods because it will logically lead us to 100% free concerts is kind of like saying we can't ever engage in armed conflict because that will obviously lead to nuclear war. Which, fyi, is fucking dumb.
"So instead of the 10 festivals that come through every year being $50 a ticket, all of a sudden they are free, double the size, and still making money."
Make the venue big enough (which you probably can't), and get a company that sells to that specific and huge demographic...and that might actually work.
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I never said it was. Why would you imply otherwise? In fact, I said exactly the opposite. It's the economics that matters. Not how I feel at all. My feelings are meaningless.
Free concerts would aggregate a ton of eyeballs, get people to a single place maybe for a whole day.
Sure. It could. Temporarily. But it's a significantly less efficient solution than using infinite goods for free. So you're dealing with a smaller market. It's like the Britannica/Wikipedia point I made above. You're making the same mistake Gladwell makes in not understanding what makes an efficient market.
So instead of the 10 festivals that come through every year being $50 a ticket, all of a sudden they are free, double the size, and still making money.
It's possible, but unlikely, simply because it's a much less efficient market than the other way around. You're leveraging the wrong resources to make the market efficient (i.e., you're pricing products below their marginal cost). Such markets don't last.
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Remember, all those other things are fixed costs - so the marginal cost of the tickets is zero (or near zero). Once the venus is paid for (fixed cost) and so on, there is very little to say that you would need to charge.
Heck, except for people to heck to make sure there is nothing dangerous in people's bags, you wouldn't even need ticket takers anymore. If anything, it would be cheaper to run the show. :)
Marginal costs on this Mike?
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Just because "adding one more" is relatively inexpensive, that seat is still a limited resource (security guards/gates/chairs/distance-from-stage). Surely any sound business person would charge whatever the market is willing to bare for that scarce resource.
The concert is one main scarce resource that a band has. Why on earth would they give that away for free if there is enough demand to pay for the marginal-cost-plus-profit?
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This is where I deeper economic understanding would help. You are right that the marginal cost of a ticket is at least close to zero. But because the EVENT GROUNDS are a scarce good, you get to charge above marginal cost.
That's the whole trick to profiting. Is finding the *scarce* goods where you *CAN* charge above marginal cost. The whole point of understanding marginal cost is that it's in a competitive market -- where you don't have monopoly control -- that prices get pushed down. It's THOSE goods that get priced at marginal cost.
But a concert ticket, where the operator controls access, you can charge above marginal cost.
It's all about understanding the difference between a scarce good and an infinite one.
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I would think that Virgin is paying the bands to play. Virgin is offering the festival for free to promote its own brands (music, mobile, airlines, clothing, Branson, etc...).
In addition, I bet there is money being made from concession stands, etc.
If the bands are being paid (or at least having their expenses covered), then they are losing nothing by putting on multiple free concerts in order to promote their music (remember, Virgin Music (and their bands) still believe in selling plastic discs), and gain popularity for those bands' *next* non-free concert tours.
Remember, at some point in every bands' career, they perform free. Sometimes they do this at multiple points to go from one level of fan-ship to the next.
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by Anonymous Coward - Jul 1st, 2009 @ 3:35pm
Outdoor festival concert - how many seats at Woodstock?
Remember, you call it a reason to pay today, but what happens when all your favorite bands have come through town and played for free?
Woodstock was a one-off. Also it was a different business model in those pre-digital days.
I think you're forgetting that there's no such thing as free - the money to finance the event is coming from somewhere but not necessarily ticket sales for THAT event. If you go to a free show, the only way you get out without spending money is if you pack your own food and drinks. Does the venue let you take in your own food and drinks at a "free" concert? Many do not. If free concerts become prevalent as you suggest, financing will have to come from somewhere and the sources will need to get a return on their investment or they will stop investing and free concerts will end. As ever, follow the money.
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"Does the venue let you take in your own food and drinks at a "free" concert? Many do not. If free concerts become prevalent as you suggest, financing will have to come from somewhere and the sources will need to get a return on their investment or they will stop investing and free concerts will end."
Now, replace "concert" with "CD of new music" and start thinking really hard. I know that Mike doesn't like to consider this route because he doesn't see festival style events as "infinite", but they can be made effectively infinite.
"FREE!" is what the consumer sees - it isn't what it really costs. But if your beer and hotdogs are a little more expensive, if your t-shirts are a few dollars more expensive, if you have a few more advertising possiblities, etc, then yes, you can do a major ass concert for free, pay the bands good money, and make a good living doing it.
It's doubly easy for Virgin, because they have so many of their own companies that can get involved. Example their new sat they just pushed up today that will offer low cost sat phone service all over north america, a truly new competitor in the wireless world. Can you imagine a north american festival tour based on that?
The fans would see free - and over time, just like with CDs, once they get use to getting something for free, it degrades the potential price for everyone else too!
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Not at all. It's basic *economics* that will stop free concerts (beyond simple promotions). It's simply too expensive to run them for free. The same is not true for music itself, because of the difference between scarce goods and abundant goods.
I know it doesn't agree with your world view on it, but have you truly considered the implication of "cascade runaway free"? Do you think you can stop it only because you like this version and not the next version?
It's got nothing to do with "my world view." It has everything to do with economics. It's not about me "stopping it." It's about how economics works. You've already admitted that you don't understand some rather basic concepts in economics, so perhaps it's not surprising that you don't get this either. But, really, for your own good, I would suggest doing a little reading on these topics.
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Virgin is a great example. They have many products to promote (including music). So if they put all of their acts on a "Virgin World Tour" that has a free concert in every town (with of course plenty of upsells to everything from Virgin Air to t-shirts to, I dunno miniputt games), and they pay the bands a working wage to do the deal, they can easily run free concerts all over the place.
After all, it's right in Chris's book: Advertising supported "FREE!".
If certain acts can attract sponsors, and decide to do the tours for free, who is to stop them? At what point would it set a precedent that would tip the public's mind on the true value of concert tickets?
For all the times that you tell us to have an open mind, I can't believe you have just shut this one down. It's being done on a small scale today, maybe on a bigger scale tomorrow?
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You seem stuck on this "free" word, without hearing everything going on around it. The "free" is about giving away unlimited resources (or nearly unlimited) in order to garner higher prices for non-free (scarce resources).
The ONE example you are touting is specifically giving away scarce resources (though leveraging that in order to sell/promote other scarce resources).
The idea that bands would start having nothing but free concerts is a plausible one assuming they get the sponsors and (a cut of) the concessions. However that is leveraging a scarce resource (live performance) in order to make money.
Seems like they'd be far more efficient (which, after all, is exactly what economic forces tend towards and what Mike bases most of his arguments on) by giving away unlimited, zero-cost promotional items (i.e. digital copies of music) and make more money by selling concert tickets.
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Concerts are only scarce when they are in a closed room with a limited number of seats. Physical buildings are sort of the DRM of concerts. Move them outdoors into a very large open area, and the limits are only that of the travel of sound and the ability to get people into the area.
It isn't infinite, but the marginal costs of adding new attendees is zero, because all of the costs to do the show are fixed costs. 1 person shows up, 100,000 people show up, the fixed costs are the same.
When you raise the number of people at an event, you up sales of goods (t-shirts, food, hackey sacks, whatever you want to push) with no increase in marginal costs. Plus by aggregating enough eyeballs and ears, you have created the perfect advertising potential.
Is it truly free? Nope, it costs a ton of money to put on a show. But guess what: It costs time and money to produce a new CD as well, but that doesn't stop it from becoming a virtual good with infinite distribution and limited marginal costs to replicate.
The difference is only in how you look at it, where you draw the lines.
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Yes, *recording* a performance costs money, it is a scarce resource. However, *copying* that (digital) recording doesn't, it is an unlimited resource.
So artists should be getting paid to *record* the album. They, however, should not set up their business model on selling *copies* of that recording because basic economics dictates that the price of those recordings tend towards their marginal costs (zero).
I hate analogies, but think of a sculptor who sculpts something at no cost but then tries to charge people to view the sculpture (he is not selling the sculpture). He has created the work without being paid, but then hopes that people are willing to pay (continuously) for access to view that sculpture. Think of the infrastructure and legal protections that sculptor is going to set up in order to protect this (poor) business model: a facility to house the sculpture, staff for the facility, marketing to make people aware without taking away from people's desires to view it, security measures to stop people entering the facility, security to stop people enjoying the sculpture in non-visiting ways (e.g. block all cameras/cellphones), legal people to chase down any leaks of images, etc...
That is a LOT of work simply to protect a poor business decision. Instead, that artist could have looked at ways to make money from *making* the creation and let the world view it for free. Viewing it free promotes the artist's work, allowing him to raise money for future public works as well as being contracted for private works (and establish a hefty profit).
I'm sure you will punch lots of holes in that analogy, but the basic point is that a TON of effort has to go into supporting a poor business model. And the only reason that business model is chosen is because "that's the way it is done".
Great economic accomplishments comes when entities buck the norms. Netscape changed the world by giving its main product away as a no-cost (not for commercial use) download. They made a hell of a lot of money doing that (and had incredible potential to make much, much more had they executed better in other areas of their business...)
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If you live someplace warm with an unlimited amount of sound equipment and volunteer staff maybe. Otherwise, no. Try that concept in, say, the Twin Cities around December and see how that works out for you. The point is that there are a TON of limiting differences between concerts and digital copies of music.
"It isn't infinite, but the marginal costs of adding new attendees is zero, because all of the costs to do the show are fixed costs. 1 person shows up, 100,000 people show up, the fixed costs are the same."
For JUST the music, yes, that's true. Not for all the other things you can sell them. But that's besides the point, no one's advocating that musicians start routinely offering concerts in seatless, open venues that have no entrance gates. But way to derail the thread with a strawman.
"When you raise the number of people at an event, you up sales of goods (t-shirts, food, hackey sacks, whatever you want to push) with no increase in marginal costs."
That's not true, because you need to be accounting for how many of those goods you're going to need. You're not going to get it exactly right, but you need to plan. Planning for one extra person means sourcing one extra tshirt, beer, hot dog, etc. Despite goods being bought prior to the show based on estimated need, those are not static costs. More people means more goods, and the per unit cost of good n is roughly the cost of good n+1.
"The difference is only in how you look at it, where you draw the lines."
Haha, no it isn't. It's in the physicality of the good. There's nothign metaphysical about this. One is a unique event/good, the other is a copy made at zero cost.
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marginal costs are only the costs to add 1 additional visitor. THERE ARE NONE. Everything in this case is a fixed cost, until you reach the capacity of the facility / location.
"Planning for one extra person means sourcing one extra tshirt, beer, hot dog, etc. Despite goods being bought prior to the show based on estimated need, those are not static costs. More people means more goods, and the per unit cost of good n is roughly the cost of good n+1."
Not at all - you already had hotdog vendors and all that stuff. Marginal cost for one additional visitor is zero, everything you listed is a fixed cost.
It's fun to discuss from Mike's side. You don't have to make too much sense :)
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A song is infinite whether you want it to be or not. A live performance can be as scarce as you want.
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Reading recommendations
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Now I think you're just ignoring past remarks and being purposefully disingenous (I can't tell because of the AC handle), but how can you equate the limited number of seats and venues for concerts coupled with the uniqueness of a live concert (the concert you attend on Tuesday won't be the same as the one I attend on Friday) with easily/infinitely replicable digital bits? The idea isn't don't charge me for anything ever. The idea is don't charge me for what I can get elsewhere for free. I can't get a Metallica concert for free on the internet.
"All I am looking at is applying your same process on recorded music to live music. Where would it end?"
I'd say that in general, that would be a bad plan. Free isn't as advantageous with concerts. Where it might be is if you are building a fanbase and have a band that is kick ass live, you play one free concert in 5 major cities while you're getting started and unknown to generate word of mouth. But once you're in demand, why would you NOT charge for the concert that can't be replicated?
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There will only be a free *audio* book available. The "free" ebook will only be available for a *limited time* and under a traditional commercial copyright.
That's not "free" in a true or modern sense at all. Anderson and Hyperion want you to buy the book, but sure, Anderson is giving away an audio file of it...he will also make ancillary money off the 'concerts' of speaking engagements, book tours, too etc. My question is why not 'eat your own dog food' and license the text-based ebook under Creative Commons of something, then ?!?
They aren't practicing what they preach...but many will still buy it hook, line, and sinker because it's the cult of the web.
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Here is a scenario for free concerts: every alcohol vendor (say Bacardi, Anheuser-Busch) now owns all bars and venues, and everyone has disposable income and they do not need to work early in the morning. If they could just get people inside these venues, they can sell them alcohol. How will they do it? Maybe they can give free concerts. Of course, the staff and performers get paid from the alcohol revenues.
Note: This scenario does not exist everywhere (maybe only in Miami or Long Island?), so it does not make sense to do it. Because:
-alcohol vendor don't own every bar and venue
-everyone does not disposable income
-everyone has to work the next morning
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I find it amazing that you can spot that. Care to share your methodology?
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Re:
It was in his claims about YouTube and Apple -- both of which he got the basics wrong. He had the wrong numbers for YouTube and was off by orders of magnitude with Apple. I'm sorry if I did not make that clear.
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Perhaps Mr. Gladwell (I like that name, plus he has goofy hair, a definite plus) should collaborate with you..?
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I personally think it is more an indication of a lack of actual content. Mike, you have the university experience to know that when it comes to writing papers, you have to use your own words. Quotes and such are nice, but lifting section whole from another work and just dumping them together doesn't equate to an original thought.
I think in many ways Chris Anderson started working on "FREE!" more than 2 years ago, publish the first chapter (as it was at the time) more than 18 months ago in Wired, and since then he hasn't been able to come up with enough real material to support his positions. I think he saw trends that he thought would play out by now, but as the publishing deadline came up, reality hasn't changed anywhere near as much as he original suggested in the Wired Chapter 1 article.
In the Long Tail, he had at least some snapshot numbers (not really longer term because he is trend spotting) that at least supported his claims, and he wrote many of the chapters sort of rehashing those numbers in different manners. Even towards the end, the Long Tail gets a bit of of energy because there almost wasn't enough material to support it.
Mike, you would know this better than anyone. While the "FREE!" revoluton is a pretty concept, there is remarkably few true examples out there to work from, and certainly not very many relevant new items to work from. It is all still very theoretical, which makes it very hard for Chris to write a "fact based" book. In the end, he has to do what you do here, often bringing in other people's opinions and stacking them together to create the illusion of fact.
In the end, Chris's book is either 3 or 4 years too early, or 2 years too late. I think it is the latter rather than the former.
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Re:
Indeed. Which is why I was not satisfied with Chris' response.
That said, the larger point still stands. If the overall content does engender original thought, who really cares? The passages Chris is accused of copying are minor parts of the book -- supporting information to back up the main thesis. I agree that it's sloppy and bad and detracts somewhat from the work, but it's been blown out of proportion.
I think in many ways Chris Anderson started working on "FREE!" more than 2 years ago, publish the first chapter (as it was at the time) more than 18 months ago in Wired, and since then he hasn't been able to come up with enough real material to support his positions. I think he saw trends that he thought would play out by now, but as the publishing deadline came up, reality hasn't changed anywhere near as much as he original suggested in the Wired Chapter 1 article.
Hmm. I disagree entirely. Have you read the book?
Mike, you would know this better than anyone. While the "FREE!" revoluton is a pretty concept, there is remarkably few true examples out there to work from, and certainly not very many relevant new items to work from. It is all still very theoretical, which makes it very hard for Chris to write a "fact based" book. In the end, he has to do what you do here, often bringing in other people's opinions and stacking them together to create the illusion of fact.
Again, this is simply not true. There are many, many, many examples of it at work. And, since the basic economics actually remain the same, there are tons more examples of P = MC in a market place. All this adds is that the equation remains the same in the presence of zero marginal cost, while noting that a zero marginal cost is more common today. That's rather indisputable.
I think you think Chris' book is trying to say something it does not.
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Heck, I am flying to asia next week - send me a copy and I can read it on the plane. After all, it's "FREE!", right?
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Free or not
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Free Buzz
I look forward to actually reading the book, but I do belive two things:
1) when free has been the price (legally or not) there is no turning back, and you need to build around Free, not over it.
2) far too many underestimate the other forms of compensations than monetary. In a p2p economy, I'd rather have more P:s than G:s.
Then I do wonder how the rookie mistake on the Wiki ref. could slip in. It amazes me!
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Re: Free Buzz
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Free as ac ommercial exercise
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Gladwell Article-- Why do we equate genius with precocity?
http://www.newyorker.com/reporting/2008/10/20/081020fa_fact_gladwell
The imprecision of their goals means that these artists rarely feel they have succeeded, and their careers are consequently often dominated by the pursuit of a single objective.
These artists repeat themselves, painting the same subject many times, and gradually changing its treatment in an experimental process of trial and error. Each work leads to the next, and none is generally privileged over others, so experimental painters rarely make specific preparatory sketches or plans for a painting. They consider the production of a painting as a process of searching, in which they aim to discover the image in the course of making it; they typically believe that learning is a more important goal than making finished paintings. Experimental artists build their skills gradually over the course of their careers, improving their work slowly over long periods. These artists are perfectionists and are typically plagued by frustration at their inability to achieve their goal.
In this piece, Gladwell makes several great points. However, an almost OCD-like behaviour can be interrupted as an artist signs on the line, and turns over the art in return for a recording contract.
Oftentimes, artists are unable to return to their previous work to improve upon it, remix it, or create new art from what was once theirs, and create new art, as the art needs to be 90% new, and often the copyright is owned by the studio, label or record company itself. Essentially, if it's not 90% new, then the artist is sequestered from the hand that feeds them from improving it.
This is especially troublesome considering the continued legal advancement in Copyright law.
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Re: Gladwell Article-- Why do we equate genius with precocity?
Today, it seems you need to be a lawyer to create art, or be a manufacturer in general. Today, the US offshores most of it's manufacturing. Often, this is done because it's seems to cast blame on the contracted manufacturer.
This simple idea is what grew overseas outsourcing exponentially, and is why creatives are not developing stateside.
This simple fact in itself is sad.
I promise you this: If we reformed copyright and IP (Imaginary Property) law so the creative can create, we'll fix many things with this economy, because we'll have products to produce, people to employ, and incent American Commerce.
Why is the USPTO is under the Department of Commerce, as the founders intended? Why is it when you mention "Hey, I've filed a patent" people's eyes roll and think it's a legal issue?
Until Copyright and IP is no longer a method used to economically exploit people, it will only be used as a tool to economically exploit people.
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Questions
I realize you get lots of people attacking you on here, and appreciate the time you spend responding. So a disclaimer: these aren't attacks, just genuine questions.
1) You say: "At other times, though, money can be friction. It can limit transactional effectiveness by acting as a kind of crutch. That's where non-monetary benefits can suffice (or do a much better job) in rewarding people for their actions. In those scenarios money gets in the way and actually makes a transaction less efficient."
I'm not an economist, so I need help on this. Can you provide me some specific examples that illustrate how "money is a crutch" or "gets in the way," and where "non-monetary benefits" are sufficient/better?
2) You say: "The trick is recognizing that things that are "free" stop being products that are sold, and become resources -- inputs -- into other products... for free."
This is the part of your argument (developed over many posts, not just here) that I understand but can't always agree with. To my ears (and I admit, I'm a fiction writer who would like to make money from my efforts), this sounds like you're telling artists to take the most valuable thing they have (their creations) and use it as a "resource for other products." In other words, turn my art into fertilizer. But the art IS the most valuable thing, and rare (if it's of good quality). Am I misunderstanding? Because it sounds very much like this argument devalues the most valuable thing in the equation.
3) You say: "it ignores the actual nature of the argument (this is happening) with a moral discussion (is this good?)"
I don't see why this is necessarily a problem. There are many things that happen, and happen naturally, that we prevent by force of law grounded in a moral decision. People steal, rape, abuse, neglect ... and do so naturally ... and despite our best efforts, these things are still "happening" ... yet no one says it would be wrong to bring morality to bear on things that are already "happening." This is a weak argument, in my opinion.
4) On plagiarism, you say: "someone taking his own work and adding value to it and doing something different wasn't such a bad thing after all"
This issue seems very simple to me. Your statement is true if the person serving as the inspiration receives credit (which means, it ceases to be plagiarism). If they don't, then the plagiarism (if intentional) is insulting and potentially damaging. Credit for inspiration is like free advertising ... and I know you like free ;)
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Re: Questions
Sure. I think the Wikipedia example is quite clear there. If some editors of Wikipedia were suddenly paid, it would change the dynamic. FEWER users would be willing to volunteer, and there would be all sorts of additional administrative costs for Wikipedia to figure out.
Another example is YouTube/Revver. When YouTube first got big, Revver decided to compete by *paying* people to host their videos on Revver. And, certainly, some did. But it added a huge administrative burden, and it made many people who were creating videos uncomfortable with Revver because it didn't feel as "pure" for them -- so a lot more people stuck with YouTube. Money acted as friction.
We also recently had a site contact us (and I'm blanking on the name, though I should dig it out) where they offered up money to people for writing and submitting fiction. And what amazed them was so few people took part. They said when they asked people, people simply said it sounded too good to be true, so they didn't trust it. That lack of trust? Friction.
So I think in cases where the other benefits are important to users, the money can very much act as friction.
This is the part of your argument (developed over many posts, not just here) that I understand but can't always agree with. To my ears (and I admit, I'm a fiction writer who would like to make money from my efforts), this sounds like you're telling artists to take the most valuable thing they have (their creations) and use it as a "resource for other products." In other words, turn my art into fertilizer. But the art IS the most valuable thing, and rare (if it's of good quality). Am I misunderstanding? Because it sounds very much like this argument devalues the most valuable thing in the equation.
This is where there's confusion over value and price. Price is set by the intersection of supply and demand -- if supply is infinite, doesn't much matter how valuable it is, price is going to be zero. Air. Quite valuable. The fact that we breathe for free doesn't devalue air.
And, to be quite clear, I'm actually suggesting valuing the art quite highly. It's just that you need to direct that VALUE into a scarce product, such that you can monetize the value. You're saying that if something is valuable, you should be able to monetize it directly. Economics, unfortunately, says that's not how markets work. I really wish it were that easy. I think (sure, some may disagree) that the content I write here is quite valuable. But I need to come up with a business to monetize that value. I don't just get people to pay me for it because it's valuable.
So the point I'm making is that, yes, the content is valuable... you then need to come up with a business model that takes that value and makes some scarce good worth paying more for it. Then you've used that value to increase the price of something.
So keep in mind the separating between price and value and hopefully it becomes cleaerer.
I don't see why this is necessarily a problem. There are many things that happen, and happen naturally, that we prevent by force of law grounded in a moral decision. People steal, rape, abuse, neglect ... and do so naturally ... and despite our best efforts, these things are still "happening" ... yet no one says it would be wrong to bring morality to bear on things that are already "happening." This is a weak argument, in my opinion.
I'm not saying the morality shouldn't be discussed. I'm just saying that's not the point of Chris' book. His is to explain what is happening. Malcolm seems to think that because he doesn't discuss the morality, that what Chris says is happening isn't.
If someone writes an article about a crime that happens, must they also include a section on why it's evil? No. They're reporting on what happened, not moralizing on whether it is good or bad. That's what Chris has done with his book.
I'm just saying these are two separate things, and Malcolm is making an argument that has nothing to do with Chris' book.
Separately, when it comes to the moral argument, I've discussed this elsewhere, but I think moral arguments only come into play when there's net harm to society, because then you have to figure out who wins and who loses. But with content creation, there's enough evidence that the overall pie is larger, and people who put in good business models can all benefit, thus I have a hard time believing there's as moral issue at all. We don't think it was a moral issue that buggy whip makers went out of business. We assume they made a bad business choice in not adapting. But if they'd started making steering wheel covers, they probably would have been a lot better off. Thus there's no moral question involved.
This issue seems very simple to me. Your statement is true if the person serving as the inspiration receives credit (which means, it ceases to be plagiarism). If they don't, then the plagiarism (if intentional) is insulting and potentially damaging. Credit for inspiration is like free advertising ... and I know you like free ;)
Yes, I've tried to make this clear, but have failed I think. I do think credit is quite important. But I think that it's a self-correcting mechanism. Look at what's happening here. Chris' reputation (a scarce good) is being damaged by this story. But, at the same time, those who wrote the original works are getting SIGNIFICANTLY MORE attention as the story has come out. If he had just credited them, NO ONE would have paid attention.
So, I agree that credit is important, but my point was that it doesn't take away from the quality of the overall work. The work itself stands alone.
I don't see the "harm" that was done because I believe it self-corrects.
Hope that answers your questions.
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I don't the "free concert" idea is that daft at all. What matters is that wherthger Perhaps it can also be extrapolated to movies, which are also "infinite" goods? In these dark times, companies can enter into deals with moviemakers and theater owners for free movie screenings.
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Follow the Free
Since both Chris Anderson and Malcolm Gladwell quote me at some point, and since you are interested in the debate on the free, I thought you might find the evolution of my own thoughts on Following the Free to add something to the conversation:
http://www.kk.org/thetechnium/archives/2007/11/technology_want.php
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Re: Follow the Free
Since both Chris Anderson and Malcolm Gladwell quote me at some point, and since you are interested in the debate on the free, I thought you might find the evolution of my own thoughts on Following the Free to add something to the conversation:
http://www.kk.org/thetechnium/archives/2007/11/technology_want.php
Hi Kevin! Thanks for adding this. Definitely familiar with your work, but I agree that piece is a valuable contribution to this discussion.
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In Wikinomics, they argue that companies should have a mixture of free, open source, peer produced, and proprietary-for-profit products. I see Free as combining the two approaches.
Offer a simple free product that the majority can use. Charge for the niche products or to have people save time and/or offer value over the free products.
It's an intriguing idea. I can see a million ways for free to go wrong and a few hundred for it to go right. It's a delicate dance.
For one, despite morality and legality, people are going to continue to pirate music. Apple and Amazon offering drm free music is a step in the right direction for valued added content. If only the computer industry would learn.
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