How Cooks Source Magazine Learned That Reputation Is A Scarce Good... As Reddit Applies The Social Mores Of Justice

from the reputation-is-a-scarce-good dept

One of the key points we've made over the years is that reputation is a scarce good, and doing something bad can be quite costly. In fact, in showing how social mores can often be much more effective than copyright laws in dealing with actions where someone is "wronged" by having their work copied in ways that appear to be unfair, we've suggested that social costs are a much more effective means of punishing those who do wrong.

As an example, check out this story, first sent in by slacker525600, but also submitted many more times, about how Cooks Source Magazine copied one woman's blog post and published it as an article, without asking her permission or letting her even know about it. They did put her name on it, but she only found out after a friend spotted it and told her about it. Where the story takes a bizarre twist is after emailing with the editor of the magazine, Judith Griggs, asked the original author, Monica, what she wanted. Monica suggested a public apology (on Facebook) and a modest $130 donation to Columbia's journalism school. That's when Griggs responded like this:

"Yes Monica, I have been doing this for 3 decades, having been an editor at The Voice, Housitonic Home and Connecticut Woman Magazine. I do know about copyright laws. It was "my bad" indeed, and, as the magazine is put together in long sessions, tired eyes and minds somethings forget to do these things.

But honestly Monica, the web is considered "public domain" and you should be happy we just didn't "lift" your whole article and put someone else's name on it! It happens a lot, clearly more than you are aware of, especially on college campuses, and the workplace. If you took offence and are unhappy, I am sorry, but you as a professional should know that the article we used written by you was in very bad need of editing, and is much better now than was originally. Now it will work well for your portfolio. For that reason, I have a bit of a difficult time with your requests for monetary gain, albeit for such a fine (and very wealthy!) institution. We put some time into rewrites, you should compensate me! I never charge young writers for advice or rewriting poorly written pieces, and have many who write for me... ALWAYS for free!"

That response not only shows a rather confused understanding of copyright law, but also suggests someone who's kinda sorta heard arguments about why copying can be beneficial, and jumbled them all together in her head. Now, we've spent plenty of time over the years showing how content creators can be better off allowing their works to be copied, but even so, Grigg's response appears totally tone deaf to what Monica's actual concerns were. But here's where social mores and reputational value take over. Monica's story made it onto Reddit and it got picked up by tons of others, leading the Facebook page of Cooks Source to be filled with angry comments from people supporting Monica.

And, just like that, Cooks Source (and Judith Griggs') reputation gets knocked down quite a bit. Reputation is a scarce good, and doing things that people don't approve of can come back to bite you.

There are a few other interesting lessons out of this. First is that, contrary to what some people claim, you don't have to be a "big name" to make these things work for you. People have a sense of when someone has been genuinely wronged, and they step up. So, Monica was able to get attention for this, despite not being "famous" in the conventional sense. Second, contrary to the claims that the various "online mobs" that hang out in places like Reddit "just want everything for free," various online communities have always shown a willingness to stand up against situations where they feel someone was genuinely wronged. And that should give you an idea of what they really think of various situations where some record label complains about file sharing. It's a totally different situation, and people react accordingly.

Filed Under: copyright, culture, reputation, scarce goods, social mores
Companies: cooks source

Making The 'Significant Objects' Project... Even More Significant

from the recycling-for-profit dept

Back in July, we commented on the Significant Objects project where 100 authors are writing up 100 stories involving 100 various trinkets -- and then selling those stories along with the associated items on eBay for a tidy profit. (The project originally struck me as an experiment to see if the one red paperclip stunt could be mass produced in some way as a sustainable publishing business.) Now, just a few months later, Slate has teamed up with the Significant Objects folks with a contest for Slate readers to submit their own 500-word stories about a cheap tchotchke -- a BBQ sauce jar bought at a thrift store for $0.75. The contest attracted over 600 stories to be judged by Slate and the Significant Objects founders, and the winner gets the honor of being picked as well as the proceeds from its eBay auction -- which has a current bid (and profit) of about $20.

This contest is brilliant in that it not only highlights the concept that every product is a bundle of scarce and infinite goods, but it also demonstrates that content can be used to engage with an audience as a form of entertaining advertising. For the price of a bauble and some editorial judging, Slate connected with its fans and gathered a bit of demographic information on its readers who sent in a story (submissions had to be accompanied by an email address and location). Imagine if Slate had instead put a banner ad on its website with a form to fill out for personal information, the response rate for that would likely be much much lower. But with this contest, the cost of the BBQ jar was negligible, and Slate editors spent their time reading stories and got a peek into the creative minds of its readership. Okay, the drawback is that the submission judging process is actually not a trivial task, especially when there are more than a handful of entries (and more than a couple judges). Even Google hasn't exactly figured out how to judge its own Project 10¹⁰⁰ contest. However, the search giant opened up the judging to let anyone vote on winners to help narrow down the selection. (And there are other examples of crowdsourced judging processes like Threadless's tshirt designs.) So I envision the next generation of advertising contests reaching out to audiences, calling upon more volunteers, and trying more and more creative campaigns to produce scarce goods out of thin air.

Filed Under: advertising, content, infinite goods, scarce goods, significant objects
Companies: slate

Using Creative Fiction To Increase Value Of Trinkets On eBay

from the using-infinite-goods... dept

When we talk about understanding how to embrace the economics of infinite goods, one of the key points I've tried to make is that every product is a bundle of scarce and infinite goods. That's a point that some people have a lot of trouble with at times, insisting that some people who create infinite goods have no scarcities to sell... and, conversely, that those who make scarce goods, sometimes have no infinite goods to give away with them. While it may be a bit more complicated to separate out the scarce and infinite goods, it doesn't mean they don't exist.

Parker writes in to point out a fascinating example. Apparently a group of fiction writers are experimenting with selling physical goods on eBay with fictional stories given away "free" in the description. The project is called Significant Objects, and involves a bunch of fiction writers purchasing random trinkets, and then coming up with a neat story to go with them. The post at io9 notes that some stories seem better than others at increasing the auction bids, but points out that: "If Rosenfeld's success is any indication, these authors may actually get paid more for short fiction on eBay than they would at most publications."

Again, some will incorrectly claim that we're saying that fiction writers should start selling crap on eBay, but that's not it at all. This is just one (fun) example of many of content creators smartly using infinite goods (the stories) to make a scarce good (the trinket) more valuable, and putting in place a business model to profit from it. Once again, we learn that creativity knows no bounds, not just in creating content, but in playing around with new business models.

Filed Under: auctions, business models, fiction, infinite goods, scarce goods, significant objects, trinkets, writers
Companies: ebay

Software Development Is A Scarce Good

from the development-costs... dept

Whenever we talk about business models and understanding the difference between infinite and scarce goods, someone almost always complains that things like music or software aren't infinite goods, because they "take resources to develop." But, of course, we've pointed out that's exactly the point. The development is a scarce good, and you can come up with plenty of business models to get paid for creating content. But getting paid to create content is different than getting paid over and over again for copies of that content. This seems a little tricky for some to understand, but: creating new content is a scarce good -- that content, once created, becomes an infinite good.

So, if you're looking at business models, there are plenty that recognize this and help get people paid for the creation of content, rather than for trying to distribute copies of that content. We've talked, for example, about programs like Jill Sobule's and Marillion's, where they basically get fans to agree to fund the creation of new albums, with additional benefits offered to those who do so. Now, Chris Gruel points us to an example where a community bands together to put up a bounty to get a certain software application developed, with the first person who does receiving the bounty. In many ways, this is similar to our own business model with the Insight Community, where we pay people to develop insightful content. It's great to see more examples of this business model in practice.

Filed Under: development, scarce goods, software

Monty Python's Meaning Of Free: The Holy Grail Of Massively Increased Sales

from the and-that-is-the-speed-of-an-unladen-swallow dept

Last year, we wrote about Monty Python's decision to put all its content online for free hoping that would drive people to buy more of its scarce goods -- such as DVDs. And, as a bunch of you have submitted, it appears to have worked wonders. Monty Pyton's DVD sales jumped an astounding 23,000% and are now the number 2 best selling item in the Movies & TV category on Amazon.com. Who was it that said "you can't compete with free" again?

Filed Under: business models, monty python, scarce goods, videos, youtube

Turns Out There's Lottttttttssss Of Money To Be Made In T-Shirts

from the who-knew? dept

We've pointed out in the past that folks who don't want to understand the economics of scarce and infinite goods often falsely claim that the business model we suggest is all about selling lots of t-shirts. Or, more specifically, when they comment in a mocking fashion, it's usually something like "lotttttttttttttttttttttsssssssssssssssssss of t-shirts."

The truth is that the business models we've shown usually have little to nothing to do with t-shirts. There are tons of scarcities that have nothing to do with t-shirts, and often aren't even physical goods (another mistake people make is assuming that scarce means physical). Usually we're talking about things like access and attention as valuable scarce goods. However, perhaps we were being a bit too flip in ignoring t-shirts ourselves.

Clive Thompson has a short article over at Wired looking at "the t-shirt economy," noting that it's actually a pretty big business: on the order of $40 billion in branded or decorated apparel (by comparison, the worldwide market for recorded music was supposedly $31.8 billion in 2006), and some of that definitely comes from content providers who are providing content for free and making money selling t-shirts. I still don't think it's the greatest business model out there (despite what some of my critics like to claim I've said), but I have to admit I'm rather amused by the fact that the "t-shirt economy" is actually getting some attention.

Filed Under: economics, infinite goods, scarce goods, t-shirts

You Don't Have To Sell Software

from the seriously dept

Reader Philip writes in to ask about our thoughts on a commentary on News.com by Dave Rosenberg concerning Sun's open source strategy. Rosenberg seems very concerned that Sun has decided to forego trying to sell software directly:

Sun's approach--at least the way I'm reading it from Jonathan Schwartz's statements, is about making the software totally free and trying to sell support and hardware. This clearly diminishes the value of the products and doesn't offer a mechanism that encourages people to pay for software.

It's difficult to see what Rosenberg is worked up about here. Sun seems to be following pretty closely an economically sound approach to a market: using infinite goods (software) to make scarce goods (hardware and services) more valuable. That's a lot more reasonable than using infinite goods to try to get people to pay for more infinite goods. There's no reason why Sun needs to encourage people to pay for software, and there are many reasons why they should not try to make people pay for software.

Yet, for some reason, Rosenberg seems to think that this strategy is somehow damaging to the open source movement:

It also puts an unnecessary burden on the notion of open source--such that if Sun is wrong, everyone else will look wrong too.

Why? If, as Rosenberg notes elsewhere in the article, Sun's open source strategy is different than other companies', then such a failure should be seen as a failure of Sun's model, not a strategy of embracing open source. There are plenty of reasons why Sun may (or even is likely to) fail in this endeavor. The Sun brand name has been tarnished. People may not find the hardware or services Sun is selling as providing enough value compared to alternatives (even with the software included). On the whole, it's not clear what's compelling about Sun's offer compared to the alternatives, and that's its biggest challenge. But that hardly reflects poorly on open source software or on the idea of not selling software.

Filed Under: business models, economics, infinite goods, open source, scarce goods, software
Companies: sun

Monty Python Puts All Its Content On YouTube To Increase Sales Of Scarce Goods

from the good-for-them dept

As quite a few folks have sent in, it appears that the always funny team of folks who made up Monty Python actually seem to get the concept of giving away infinite goods to increase the value of scarce goods. They've set up a Monty Python channel on YouTube, where they'll be putting up pretty much all of their videos in high quality. The video announcing this is quite amusing, and a good contrast to all those content providers who decided to sue YouTube, rather than learn to embrace it: First, it points out that plenty of folks have already been posting content to YouTube, and while they could sue, instead, they decided to fight free videos with free videos by putting up their own versions -- in higher quality. There's a funny segment where the Monty Python crew reacts to being told that all of this content will be available for free, and then the video notes that while this content will be free, they're hoping people viewing the videos will go to the Pythonline site and buy DVDs (scarce goods) of their movies as well. What an idea. Instead of suing, give fans what they want, and give them a reason to buy. Ideally, they would provide extra reasons to buy the DVDs, rather than just praying that people will, but this is definitely a much better reaction than so many others.

Filed Under: business models, monty python, scarce goods, videos, youtube

Access Is A Scarce Good

from the a-reminder dept

While some of our critics like to falsely claim that the business model we describe for leveraging "free" is simply about selling "t-shirts" since they're the only scarce good that our critics can think of, it's important to point out that scarce goods are not just tangible goods, and "access" is often one of the most valuable scarce goods out there. In fact, we've definitely seen some musicians embrace this as something worth selling, but haven't seen it as much in other contexts. That's why it's interesting to see journalist/blogger Ana Marie Cox trying out a version of that business model herself. Cox, famous initially for being the original editor of the Wonkette political blog has been working for The Radar lately, but apparently it just went out of business. Cox wants to keep covering the election, and has set up a tiered sponsorship rate card:

• Anything: Good karma, knowledge that sometimes merit is rewarded. If not in this particular case.
• Over $10: A personal thank-you email (please include your email in "instructions for seller")
• Over $50: A personal thank-you phone call (please include your phone number in "instructions for seller")
• Over $100: My instant message screen name, regular personal updates via email and/or instant messages on election night
• Over $250: I will ask a senior McCain adviser the question of your choosing and send you the MP3 audio of the exchange
• Over $500: Phone call from McCain headquarters on election night, detailing hilarious antics sure to ensue
• Over $1000: One-on-one post-election dinner debrief

I have no idea if this plan will work, but it is fascinating that it basically works on a system of charging more for greater access. It will be interesting to see if Cox reports back on how well this experiment goes.

Filed Under: access, ana marie cox, reporting, scarce goods

Rock Band Video Game Selling T-Shirts Of Fake Bands

from the lotttttts-of-t-shirts dept

When critics of our analysis of the economics of infinite and scarce goods want to mock our ideas or make fun of us, they often fall back on the false claim that the business model we advocate is "give away everything and make it up by selling t-shirts." Or, rather, if they're really in a mocking mood, they usually write "llllllloooooooooooooooooootttts of t-shirts." It's quite amusing, though, of course, it shows a fundamental misunderstanding of what we mean by scarce goods.

That said, t-shirts can make up one part of the scarce goods that someone sells, though, it will almost always be a small part of it. And, there's no reason to mock the contribution that selling t-shirts can make as part of a larger business model. Reader Aaron de Oliveira points us to the interesting news that the super popular video game Rock Band is now letting players who have uploaded their own fake rock band logo order t-shirts, keychains and other merchandise from their fake band. As de Oliveira correctly notes, not only does this make some money, but it also makes the gaming experience better, connects fans more closely to the game and their own fake rock band in the game:

The company realizes it's not in the music business or in the t-shirt business. Its business model is the custom experience and it uses music (fun & free or cheap) and t-shirts to improve that experience in such a way that people are willing to pay for it.

Bingo. So go buy llllllooooooooottts of t-shirts to make it work.

Filed Under: business models, economics, infinite goods, rock band, scarce goods, t-shirts, video games