"Free is more complicated than you think"
Peter Brantley sent a link to a great summary of Scott Adams' nuanced discussion of the tradeoffs in making Dilbert freely available on the web. The punchline: "Free is more complicated than you think."
Adams reports that putting Dilbert online for free
"gave a huge boost to the newspaper sales and licensing. The ad income was good too. Giving away the Dilbert comic for free continues to work well, although it cannibalizes my reprint book sales to some extent, and a fast-growing percentage of readers bypass the online ads with widgets, unauthorized RSS feeds and other workarounds."
This sense of tradeoffs in making content freely available is consistent with our experience at O'Reilly. We find that making a book freely available can help visibility and sales of a book on a little-known topic, but for a well-known topic or author, who benefits little from the additional exposure (like Scott Adams), it can have a slight cannibalization effect on print sales. So, as a beginning science fiction author, Cory Doctorow used "free" to build his career, while Stephen King found the results of his experiments with free to be disappointing. (I explored these tradeoffs in my article Piracy is Progressive Taxation.)
The point is that we need more than one model. There is no one-size-fits-all answer. Advertising is a great model for people who can create or collect content that will generate sufficient traffic to pay for itself on the limited revenue per view provided by advertising. But that takes far more traffic than most people realize. Asking people to pay works well when the potential audience is smaller, and the cost of creating the content greater than can be recouped by advertising. But even then, you need to use "free" to some extent to make sure people find your content. If content is locked up too tightly, it drops out of the internet conversation. To this point note that above I linked to the free summary of the article on the Millions blog, not the original Wall Street Journal article by Adams, which is behind a paywall.
What's more, as Adams notes, many users do prefer not to pay, even when they value the content they want to peruse. Even advertising is not immune to the leakage that comes as people want to access the content in the way that is most convenient to them. (Adams: "a fast-growing percentage of readers bypass the online ads.") While many readers do realize that if they don't pay in one way or another, the content provider may eventually go away, this tragedy of the commons is a distant future, not something that shapes daily behavior.
Adams describes his experiment with making his non-Dilbert books free:
A few years ago I tried an experiment where I put the entire text of my book, God's Debris, on the Internet for free, after sales of the hard copy and its sequel, The Religion War slowed. My hope was that the people who liked the free e-book would buy the sequel. According to my fan mail, people loved the free book. I know they loved it because they emailed to ask when the sequel would also be available for free. For readers of my non-Dilbert books, I inadvertently set the market value for my work at zero. Oops.So I've been watching with great interest as the band Radiohead pursues its experiment with pay-what-you-want downloads on the Internet. In the near term, the goodwill has inspired lots of people to pay. But I suspect many of them are placing a bet that paying a few bucks now will inspire all of their favorite bands to offer similar deals. That's when the market value of music will approach zero.
I have faith that new business models will emerge -- both creators and customers ultimately have incentives to make the transaction work -- but there may be a rocky period where models that have worked for one type of content or another fail to do so. (For example, many of the computer book authors who used to make the StudioB mailing list a happening place no longer write books for a living. Instead, they write paid white papers for corporate customers.)
There's another class of tradeoffs in a move to an advertising-based model for funding content creation: readers are expected to give up their privacy. Marc Hedlund wrote about this recently: Infiltrating the Privacy Movement.
This was the subject of a dinner conversation I had with Rupert Murdoch at the Web 2.0 Summit (before his on-stage appearance). We talked about the tradeoffs in making the Wall Street Journal free online. It's quite clear to me that when Murdoch's purchase of the Journal is completed, the paywall will come down. He sees the Journal readers as among the most valuable advertising targets in the world. But more than that, he sees a future in which he'll be able to make those readers even more valuable by carefully and completely tracking what they actually read in the Journal.
These privacy tradeoffs are going to become even more widespread as advertising becomes the dominant model. How much would you let an advertiser know about you in exchange for their free content? How much would you pay to avoid having them know that about you?
As Scott Adams said, "Free is more complicated than you think."
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A couple of weeks ago I wrote a piece about the Inevitable business model for music.
Comparable models will arise for other types of digital (make that "digitizable") content as well. It's really mostly a question of the first layer (see the article), i.e. licenses that allow 3rd parties to come up with their own distribution and business models - such as the RSS and widgets - yet paying a reasonable fee to the original rights holders.
Sorry to post this here, but in my feedreader, Scott Adams' quote is mostly underlined as a link to the book at Amazon, apparently because the link (and the one to Studio B a few paragraphs later) is not in quotes.
"These privacy tradeoffs are going to become even more widespread as advertising becomes the dominant model. How much would you let an advertiser know about you in exchange for their free content? How much would you pay to avoid having them know that about you?"
That is an interesting problem. For unknown content, should I pay to see it so that I keep my privacy (guaranteed somehow) or peruse it but lose my privacy? Isn't this a false choice? Won't this just naturally reduce readership in favor of content that is free and maintains privacy?
Perhaps information content providers should consider the same advice often given to musicians - give away the content for free but sell the performance, the t-sheets and posters?
I look forward to a day when I get my WSJ for free, with no privacy intrusions, they sell me physical stuff and performances (conferences) and perhaps pay me for my contributions to their forums, blogs and published letters.
Then there's the irony that we may be giving up more and more of our privacy not simply to read someone else's content, but our own, posted on some social network.
free isn't complicated at all.
"free" as a "strategy" to "extract cash" might be.
but that's a different animal. entirely.
publishers and authors who want to make money
from their writing are in a tough spot, to be sure.
but authors who have a story they want to be heard
-- without a need to be compensated otherwise,
and thus no need to "track" the people reading --
are sitting in the catbird seat right now, thank you,
as they have a way to go directly to their audience...
of course, when that audience gets _more_ than
enough _free_ -- as in, no strings -- content to
keep them occupied for several lifetimes, then
yeah, it's gonna be hard for book publishers...
very sorry about that. find another occupation.
we have no need for any middlemen any more...
the crowd is finding that it can entertain itself,
and inform itself, and stimulate itself just fine,
and all the entities that want to do that for cash
will find themselves in a heap of big trouble...
so, in the long run, free is only as complicated
as you care to make it...
-bowerbird
The Radiohead experiment has garnered a lot of attention and the notion that they have established a "market value of zero" may soon be tested. They indicated that they will release a traditional CD of In Rainbows in early 2008. Will they charge for the download at that point or eliminate it? Will dispensing with the free download be a condition of their distribution agreement? Or maybe they will backtrack and dispense with the CD instead. The model continues to be fluid and subject to experimentation. Free: Subject to complications.
bowerbird,
While there's significant truth to what you say, I think you fail to understand just how much content creation is involved with some kind of economic activity. Yes, there's a lot of purely free content, designed "just to get the word out." But just watch how quickly the free world wide web turned into a huge economic engine. From 1992's utopian experiment in the sciences to today's multi-billion dollar business. Ditto open source software.
Or just look at blogging. How many of the top 100 blogs are businesses? At this point, most of them.
There has always been a huge market for the free interchange of ideas, entertainment and content. But there is always an even bigger market in which people who create things look for some way to support themselves in doing it full time.
So while your sentiment that "the crowd is finding that it can entertain itself,
and inform itself, and stimulate itself just fine,
and all the entities that want to do that for cash
will find themselves in a heap of big trouble..." is inspiring, I don't think it will hold up for long.
Even wikipedia is working hard to get donations to support itself, and with Wikia, Jimmy clearly wishes that he'd started Wikipedia as a commercial entity.
And further to bowerbird's comments from the ranks of those who make a living (still) from commercialized content:
1. Very few people can -- or ever will -- satisfy all of their content needs from the providers who do it for fun or personal satisfaction, not for money.
2. Any writer who wants to be read, or artist who wants to be seen, recognizes that marketing increases the size of the audience. Marketing costs money, however you do it. So the creators with marketing money behind them will get more audience, all else being equal, than those that don't.
This is not to say that publishing for money isn't increasingly challenged. But there are many forces at play in the matching of content to markets, and price is only one of them.
tim said:
> watch how quickly the free world wide web
> turned into a huge economic engine.
i'm not saying people who "just want to be heard"
won't end up being compensated. i say they will!
indeed, far more of them will end up receiving
more compensation than in today's environment.
they'll have more loyal fans, and a tighter bond
than today's impersonal sphere gives to authors,
and that won't hurt their paydays one bit either.
but they won't be _motivated_ by money.
and the purity of their spirit is important...
because once you lose that, you lose your fans.
> Or just look at blogging.
> How many of the top 100 blogs are businesses?
> At this point, most of them.
you look at the "hits" and you call 'em "hits".
that's true by definition. what is also true is
you don't need to be a "hit" to communicate.
i stipulate the money will always be in "hits".
but the money isn't what is important any more.
creative self-expression, and the _blossoming_
that results when it hits brains in the audience
will create a new world that doesn't need money.
tomorrow won't wanna buy what you're selling...
> while your sentiment is inspiring,
> I don't think it will hold up for long.
i think you underestimate the number of people
who have stories that they want to be heard...
we haven't even begun yet...
that's not "idealism" talking. it's hard-core reality.
the same reality that resulted in millions of blogs.
***
mike said:
> Very few people can -- or ever will -- satisfy
> all of their content needs from the providers who
> do it for fun or personal satisfaction, not for money.
mike, mike, mike. as soon as someone does it right,
collaborative filtering will knock everyone's socks off.
every single person will be fed a never-ending stream
of content that will satiate desires that we didn't even
_know_ we had. and every bit will be free, as in beer.
if you actually _want_ ads to be served up alongside,
you can turn 'em on. (or if you don't want 'em, fine.)
you'll see i'm right. as soon as the corporations realize
there's no money to be made in this sphere any more,
they'll drop it in a second. that's how they're wired...
but the tipping point will probably come even sooner,
when _authors_ realize they have no chance of being
_bought_, since there's so many free books out there.
they'll realize the only way they'll make _any_ money
is to be _noticed_ first, and the only way to possibly
get noticed will be to release their book for free too...
you can already see this, right now, in the music world.
how many bands are refusing to release their music?
how could you do that and compete against the other
bands who are offering their songs freely on the web?
if you send it out into the world, you _might_ get paid.
if you keep it in your pocket, you will _never_ get paid.
those are your choices. and those are your only choices.
believe you me, creative people can solve this no-brainer.
> 2. Any writer who wants to be read, or artist who wants
> to be seen, recognizes that marketing increases the size
> of the audience. Marketing costs money, however you do it.
you're living in the old world. the one that's fading from sight.
the new world is completely different. you need to read lefsetz.
> So the creators with marketing money behind them will
> get more audience, all else being equal, than those that don't.
i agree. but that's because the old world is still hanging on.
in the new world, with collaborative filtering, "marketing" will
be seen as a form of weakness, if not an outright kiss of death.
seriously, you need to read lefsetz. http://www.lefsetz.com
-bowerbird
Content and value is a major question and the dust is not going to settle for some time.
I am betting a lot of my time and money that the form of content and control of the content holds much of the value.
For instance, you could always listen to radiohead for free (legally). All you had to do was turn on a radio and wait. Eventually you'll hear radiohead you just had no control over when or what song you would hear. When you buy the CD/mp3 you have control and a tangible product and you pay for that control.
Written online thought is a bit different, but there are similarities. I can read Seth Godin anytime, except when I am on the subway (or plane, or bathroom). The solution is to buy Small is the new Big and get the "free" content in a valuable form.
Scott Adams coincidentally is coming out with a book of blog entries as well.
My project, ShelfMade.net will allow any reader to create on demand magazines from Internet content. And any online writer can be published into a magazine.
In essence I'm saying that for a certain type of content, worthwhile and well-thought out, the paper form will add value.
Any thoughts?
Tim,
Somehow this discussion of "free" concerning magazines, books and other text has made two assumptions that I think ought to be addressed.
The first is that "free" only means "free of charge to read in a browser" and never free as in open source or free software.
People like Cory Doctorow actually published *non-free* versions online -- unlike Linux or free software, his books forbid changing or commercial use. But what about the authors who really did publish open source versions of their books and writings, with real copylefts? We forget about those. There weren't many of them and they didn't make money at it, but open source has to be part of this discussion.
Second, the idea of free content online is always centered on non-fiction, ususally news and tech articles, newspapers, maybe sci-fi but it never is about fiction. Why is that? Today, as Stephen King and many many others note, fiction is maligned by print media -- there are almost no print markets today that pay for literary fiction, for short stories in the way that magazines did in the early to mid 20th century. Back then authors got paid thousands for a short story in a magazine; today, only one or two markets like that exist (and even those, adjusted for the times, pay much less than they ever did). Most commercial magazines, like GQ and Esquire and Cosmopolitan no longer print that kind of fiction at all. (What they do print is generally pretty racy, too, characteristic of a decadent period.) Do you think Web 2.0 can change this "decadent" trend nad revive literature? Do you think that there will be a popular web publication, the equivalent of what the Saturday Evening Post was like in the 1920s and 30s, that publishes free-to-read literature and pays its authors really well?
It would be great to get some comments from the staff at Baen's (a science fiction publisher).
Part of this is secondhand, but Baen made a decision that what they were selling was not information but a tangible thing you could carry around as you read it, and so the first book of an author's series (and possibly more) were published online with no paywall. They apparently got incredulous remarks from other publishers, and tried in vain to get the other publishers to look at their sales figures--higher for the books people can read for free.
Hence a letter saying "I read _____ online and just gave away my fourth [paper] copy to a friend."
As an author, I've (tried to) do the same sort of thing with http://JonathansCorner.com/ and http://CJSHayward.com/ . Time will tell, though.
C.J.S. Hayward
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db [11.02.07 07:54 AM]
Two other benefits of using the free model for the start up author would be fees and other work.
For some authors developing some exposure could result in speaking fees at trade shows or other special events.
Plus if you are strying to establish your business developing some exposure could drive some clients to your business. Nothing wrong with being viewed as an expert in your field.