We're going to talk about the business model of "free" today.
At the same time the music, film and publishing industries are struggling with the concept of DRM (Digital Rights Management), a few visionaries are exploring options at the opposite end of the continuum.
Last summer, I wrote about Chris Anderson's upcoming book, Free. You'll remember Anderson; he wrote The Long Tail. He also talked at last year's Book Expo America about the relationship between the Web and free content. If you'd like to read my post about that speech as an intro to today's material, you can find it here.
This week Tim O'Reilly is hosting his second Tools of Change for Publishing conference at the Marriott Marquis Hotel in New York. If you want to read my post about the first TOC conference go here.
Today's Publishers Lunch talked about O'Reilly, but also directed readers to another blogger who is talking about "generosity" as a business model. That blogger, Kevin Kelly, was the first executive editor of Wired magazine.
Kelly had an interesting post titled "Better Than Free" on his blog two weeks ago. He argues that--until the Internet came along--our economic model was based on scarcity, and our wealth came from making copies to sell. In the media industry, those copies would be printed books, DVDs and CDs.
Along came the Internet. Kelly opens his post with the line, "The Internet is a copy machine. . . [and] Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free."
Kelly's thesis goes this way:
- When copies are super abundant, they become worthless.
- When copies are super abundant, stuff which can't be copied becomes scarce and valuable.
- When copies are free, you need to sell things which can not be copied.
The rest of the post focussed on the things that cannot be copied. Kelly identifies eight uncopyable values, which he calls "generatives" because they must be generated, grown, or nurtured. Things like:
- Immediacy: People want to be the first to read the new book, the first to see the new movie and the first to own the new record.
- Authenticity: People want the "real" thing, the one that is warranted and special.
- Accessibility: People want easy access to their possessions. Look at the iPod, the Shuffle and all the other devices that aggregate our music and make it easily available to us.
- Findability: People want to be able to find the quality work in the vast sea of sludge. This is the value that I have previously described as the impediment to self-published work. Someone needs to vet for quality.
- Interpretation: People want to understand what they have. Kelly reminds us: "As the old joke goes: software, free. The manual, $10,000."
- Embodiment: People want the tangible product: the book they can hold in their hands or the live performance they can attend.
- Personalization: People don't want the generic version; they are willing to pay a lot for a personalized version. ". . .personalization requires an ongoing conversation between the creator and consumer, artist and fan, producer and user."
- Patronage: People want to pay creators. According to Kelly, people are happy to pay artists, musicians and authors "if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators."
After he identifies the eight generatives, Kelly gets to the essence of his argument:
These eight qualities require a new skill set. Success in the free-copy world is not derived from the skills of distribution since the Great Copy Machine in the Sky [the Internet] takes care of that. Nor are legal skills surrounding Intellectual Property and Copyright very useful anymore. Nor are the skills of hoarding and scarcity. Rather, these new eight generatives demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can't be replicated with a click of the mouse.
In short, the money in this networked economy does not follow the path of the copies. Rather it follows the path of attention, and attention has its own circuits . . .
Most of the suggested solutions I've seen for overcoming the free involve some measure of advertising. I think ads are only one of the paths that attention takes, and in the long-run, they will only be part of the new ways money is made selling the free.
I found Kelly's arguments fascinating, and I'm looking forward to seeing Chris Anderson's upcoming book on the subject.