What Makes Something "Better Than Free"?

Stanislav_J writes "In a very thought-provoking essay entitled 'Better Than Free' Kevin Kelly, Senior Maverick at Wired, probes the question of how thoughts, ideas and words that are so constantly, easily, and casually copied can still have economic value. 'If reproductions of our best efforts are free,' he asks, 'how can we keep going? To put it simply, how does one make money selling free copies?' He enumerates and explains eight qualities that can, indeed, make something financially viable — 'better than free.' A very timely article in light of the constant discussion of RIAA/piracy/copyright issues."

Comments

was actually performed by ... ?

[opencity]

Do people actually make imitation Grateful Dead live tapes? Some bar band (or Phish?!?) and claim it's the Dead? The mind boggles.

All of the points make sense but he doesn't address that, while he is describing value, it many cases it is valued much less measured in dollars (OK, Euros) than previous, say 20th century, media value. Sure you'll pay for the immediate delivery, I do with iTunes, but I almost never buy the whole album/disk/collection. Personalization is fine in the future but where is the great employment engine in the here and now? While media is worth a lot less money, real estate, food and energy will only continue to rise. Can 21st century media provide anywhere near the level of employment that 20 century media did? That sure is a lot of adsense.

Re:was actually performed by ... ?

[NewAndFresh]

Do people actually make imitation Grateful Dead live tapes? Some bar band (or Phish?!?) and claim it's the Dead? The mind boggles.

You have a point about the article, but I think you're harping on a tiny detail. (Although I have downloaded plenty of mislabeled music -which is probably the point he was trying to make)

All of the points make sense but he doesn't address that, while he is describing value, it many cases it is valued much less measured in dollars (OK, Euros) than previous, say 20th century, media value.

Yeah, but you can't go back in time.

Sure you'll pay for the immediate delivery, I do with iTunes, but I almost never buy the whole album/disk/collection

You paid something. (which I think is the point)

Personalization is fine in the future but where is the great employment engine in the here and now? While media is worth a lot less money, real estate, food and energy will only continue to rise. Can 21st century media provide anywhere near the level of employment that 20 century media did? That sure is a lot of adsense.

It turns out that most artists actually profit from piracy. http://torrentfreak.com/why-most-artists-profit-from-piracy/
And if you mean the industry, well think of how the icemen felt when the refrigerator was invented?

What's Better Than Getting Paid?

[NetSettler]

The article makes some quite useful observations in terms of categorizing present trends and is a worthwhile read for that purpose, I think.

But I'm uncomfortable with its "conclusions", if it can even be said to have any. (It seems to indulge a sense throughout of "this is ok, things are good, we just need to embrace them".) From the article:

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.

If I reworded this as:

In short, the money in a networked economy does not go to the people doing the work. Rather it follows the path of who controls the view, and that path has its own circuits.

it would sound a lot less benign.

He makes some casual references to the need for trust and the willingness of people buying to give money to creators. But he overlooks the fact that it's in the best (financial) interest of the people who are the conduit to do as much as possible to obstruct the ability to do this.

The industry thrives (for now) on talk of riches that can be achieved in this new world order if people just contribute freely and hope the money comes somehow, but the obvious truth is that that works better for the people who get the money than for the people who don't, and when you're touting that there's no correlation between where the money goes and where the credit is due, that's not sounding too good to me.

Just look at how long it took the TV writers to get what was obviously due them, and they were very organized. Now imagine how much difficulty a group of uncoordinated netizens is going to have getting the same, since when any number of them boycott their "jobs" putting out free content, there are gonig to be any number of others rushing in to fill the gap for free, causing the content deliverers to say "gee, why should we pay them at all?"

Re:What's Better Than Getting Paid?

[mspohr]

But I'm uncomfortable with its "conclusions", if it can even be said to have any. (It seems to indulge a sense throughout of "this is ok, things are good, we just need to embrace them".) From the article: 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. If I reworded this as: In short, the money in a networked economy does not go to the people doing the work. Rather it follows the path of who controls the view, and that path has its own circuits. it would sound a lot less benign.

I think you have missed his point here. The money DOES go to the people doing the work. Except the 'work' is the not necessarily the people who made the original work but the people who are adding value through immediacy, personalization, interpretation, authenticity, accessibility, embodiment, patronage, and findability.

I believe that his real point is that it is no longer sufficient to 'create' something and then retire on royalties but you must go out and continually provide value for that creation in the ways he lists. This is the great shock to traditional businesses publishing books, music, software, etc. Their business model has been formed on the scarcity of copies and they have failed to adapt to the reality that copies are no longer scarce.

Actually, I kind of like the concept that you have to work for a living by continually providing value rather than create a monopoly on some idea or expression of an idea and coast on monopoly rents.

Re:What's Better Than Getting Paid?

[kevinbr]

"......in a networked economy does not go to the people doing the work....."

In, for example, todays music industry, the money does not go to the people doing the work. There are rare exception like Madonna and U2, but the money goes to the distributer.

"...Just look at how long it took the TV writers to get what was obviously due them......"

Um, no. They still do not get what is due to them. I believe for example their download fee kicks in after something like 30 days ( where most of the money is made in the first 30 days ).

No one is due anything. We all have to work and in the US today millions of workers are told to adjust or starve. Writers and musicians are no different. The fact is that the cost of a digital copy is zero.

The other reality is that the existing distribution is trying to use the law to prop up a defunct model.

Take the movie distribution. I live in France but speak English. I see a movie available today in the US, but I am supposed to wait for 6 months to get it legally, when I can get it now on Piratebay? It of course never occurs to them I might pay today, if they would only make it available. They do demand creation but fuck up the fulfillment.

Or take a concert. I recently paid 120 Euros for several nights at the Nice Jazz festival. I want to buy MY concerts that I attended but of course where are they available? Bootlegs on Youtube. Demand creation yet no fulfillment.

etc etc.

With digital copying, they might want to create demand yet throttle this demand in stupid ways ( I do not want DVD's I want 700 MB downloads for my hotel at night on a laptop but no this is not a commercial choice, they fail again to to fulfillment).

So this article makes perfect sense to me. I work with IT contractors who make lots of money. They ALL download films because that is the easiest way to them, not because they are free.

Re:What's Better Than Getting Paid?

[PietjeJantje]

Actually, I kind of like the concept that you have to work for a living by continually providing value rather than create a monopoly on some idea or expression of an idea and coast on monopoly rents. Let's put it this way, let's not take the RIAA as an example because that has been muddling the discussion into a mono copyright bashing affair.

If an author, say Douglas Adams (rip), spends a couple of years on a book, your equation does not work. That is because it is based on an investment of time, and you need a return for that. Creating value after that, for instance based on your popularity, is nice, but not economically related to the investment needed for the addition of value to the initial product. Also his audience, and book readers in general, might be less inclined to purchase services after the free copy.

Do we want a culture based on the commercial return on t-shirts and such? Would Adams have written the books? I for one prefer having given him some monetary units for his product, than obtain it for free, then see if I like him and toss him some coins like he's some kind of beggar.

I believe copyright and old-fashioned publishing are outdated mechanisms in digital times. I also believe that over time many money grabbing industries got a firm, unhealthy grip on the writers, artists, etc. But I also believe the single-minded mono-culture of simply proclaiming everything related to copyright as evil, and magic solutions like making everything free and then it will all be solved, is just silly and a cover-up for the fact that people like to take things for free while not having the worry about the morality of it. This makes one equal to the RIAA. Full of greed and hypocrisy.

Re:What's Better Than Getting Paid?

[IamTheRealMike]

I believe that his real point is that it is no longer sufficient to 'create' something and then retire on royalties but you must go out and continually provide value for that creation in the ways he lists. This is the great shock to traditional businesses publishing books, music, software, etc.

You're exaggerating. The number of people working on music, books and software who can actually retire on the basis of one hit are vanishingly small. The vast majority need to be continually creating new things if they are to have a living wage. Look at 99% of the programmers in the video game industry for instance.

Actually, I kind of like the concept that you have to work for a living by continually providing value rather than create a monopoly on some idea or expression of an idea and coast on monopoly rents.

You're also using language manipulatively :-( Especially on slashdot, most peoples connotation of "monopoly" is "sole provider of something I need". Saying copyright holders are a monopoly is like saying that Nike have a monopoly on producing Nike trainers. It doesn't say anything useful. Nobody needs Nike trainers specifically, just like nobody needs Britney Spears' music specifically (regardless of what the little sisters of the world may think). What you say might apply in very, very special circumstances, like with Windows but certainly doesn't apply to most copyrighted works.

Re:What's Better Than Getting Paid?

[sayfawa]

If things go the way I expect/hope then, in your analogy, Douglas Adams would have been paid to write the book in the first place, instead of writing the book and then selling copies in order to receive payment. By the time he is done with the original work of art, he has been paid enough to make all the time and effort worth it. The valueless copies are freely distributable.

Imagine your favourite author stating that they are not going to start writing another book until they get x dollars to do it, but once they are done, the book is available for all in electronic form. Sure, there will be lots of freeloaders, but as long as the artist gets what they want, who cares?

Re:What's Better Than Getting Paid?

[hey!]

If I reworded this as:

        In short, the money in a networked economy does not go to the people doing the work. Rather it follows the path of who controls the view, and that path has its own circuits.

it would sound a lot less benign.

Let me play devil's advocate here for a moment.

Money isn't a reward for work. That's the hard lesson of business. The economic system does not care about your personal travails. It is concerned with scarcity. Money is a reward for reducing scarcity.

Over the years I have turned my hand to a number of crafts from calligraphy to woodworking. I am fascinated by the process of craft. So when I walk into a store and see a basket that was woven by some third world basket weaver selling for less than five bucks, I automatically consider how long it would take me to make that same basket if I were doing it day in and day out. In some cases I believe I could make a many as four or five if I worked extremely hard. I doubt, however, that after shipping and stocking and whatnot the basket weaver received more than a few nickels per basket.

I have also seen domestic made, artisanal baskets that sell for two or three hundred dollars, that probably weren't much more work than baskets that sell for a few dollars. While on the surface this would indicate that a superior, more deserving artisan got more money, I don't think it's as simple as that. Who's to say the third world artisan doesn't have the ability to make equally unique and interesting designs? The problem is that he or she has no way to market them; there is no money for that artisan in anything but baskets meeting the specification of the exporter. I could probably (with practice) make a Nantucket Lightship basket that could sell for $700 to $1000. Given my marketing costs, I might clear three or four hundred for a week's work. That's not enough to support the lavish (by world standards) lifestyle I lead. There are third world artisans making a few dollars a day who could do the work; if they cleared even fifty dollars a week it would be huge.

The first world artisan is rewarded in part for is artistry, but mainly because he addresses a scarcity. There aren't many people willing to work for five hundred dollars a week where he lives, and people willing to work for less than that don't have access.

Creative activities, such as writing and performing, are a hobby for the vast number of people who do them, including those who get paid from time to time. A small fraction of people make their living from them, and a vanishing small number of people make a comfortable living from them. A world of "free" copying is a disaster for those who make a frugal living from their art; it puts them back in the hobbyist category. It also dashes the hopes of those in the hobbyist category of quitting their day job. But the idea of restricting copies is not an economic one; it's a value judgment. It's the idea that people should be able to make a living producing something even if it means keeping others out of the market who would produce for sub-living-wage economic rewards.

Re:What's Better Than Getting Paid?

[cshotton]

We already have an amazing system of "micro-payments", where you and I spend a tiny fraction of the amount of money it took to create a given work. Why screw it up?

Well, it's pretty much broken when it comes to paying for items with zero manufacturing costs. If I can get something for free, there is no real economic benefit to me to pay for it. The value is in the act of creation, not the result of it. My point is that for that category of value creation, a reputation based economy is more fair than not. Lowering the barrier to entry for new participants is the long-standing job of marketing organizations, venture investors, and other entities whose market existence is based on enhancing value, lowering risk, and commoditizing novelty.

Those organizations don't go away. But what alternative do you have for monetizing "free" other than to place value on creation? That is the only unique thing in an otherwise endless sea of copies.

A Step in the Right Direction

[orionop]

In a free-market world with supply and demand determining costs, it makes sense that digital information that is in infinite supply will cost nothing. The things that are listed in TFA are things that can not be distributed infinitely and thus help guide artists and software providers toward adding valuable content that customers will pay for. Maybe sometime soon we will see less lawsuits and more content.

Re:A Step in the Right Direction

[IamTheRealMike]

You're assuming a market system is a given, seeing that without copyright easily duplicated things have no value, and concluding therefore that they have no value. That's pretty ridiculous. More likely, the base assumption is wrong - if we can't enforce copyright, then we need some alternative to markets for encouraging the creation of copyable things. Nobody knows what though, which isn't surprising, our economic thinking is clouded by capitalist religion. We have yet to reach the Enlightenment period of economics.

I would like to add "Connectability"

[Sique]

Information increases its value if it is connected to other information. Many inventions happen when separate, wellknown concepts were put together for the first time. No, I am not talking about "business method performed on the Internet", because this connection is very simple. Putting two things together of which one is all the rage is easy.

But in a cloud of possible dots finding the right ones and connect them actually creates value, and if the number of possible dots increases, the value of the single dot may be negligible, but the combination of the right ones gets more and more value. The process thus is twofold: Make every dot as connectible as possible, and find a way to spot valuable connections. Construction kits for children like LEGO show how you do it for the single dot. Every piece of LEGO can connect to every other piece (ok, sometimes with the help of a third piece, but the overall structure itself remains the same).

I hear often complain that open source software is "not innovative", and then it points out that it wasn't able to invent a single new type of building block for software. That complaint got it all wrong. LEGO also didn't invent a single new connector since the introduction of LEGO Tecnic. And when was the last time a new type of brick was invented? Often the invention of a new type of dot means that you can't connect it to anything. So the invention itself is completely worthless until you invent a way to actually connect it to something.

Many a commercial software has its value because of its combination of wellknown "dots". Photoshop is the standard because it combines Hundreds of wellknown algorithms in a unique way. SAP R/3 even is completely "open source" in a way meaning that everyone with developer rights on a SAP R/3 system can look into the complete source code of every subroutine and function block, and change it at will. But SAP R/3 draws its value from the fact that it implements so many different business concepts and business logics. Every single of it is well known, but only with a system like R/3 you get them bundled together.

And even Microsoft seldom was innovative, but it was always a good integrator. Microsoft software is not valuable because it implements things not found somewhere else. Microsoft's business was to present enough connected dots, so everyone could find something to use.

Nonsense

[clarkkent09]

Ok, to summarize for those too lazy to read the whole article: his point is that since its getting so easy to copy things (digital and in some cases physical), the actual products will become super abundant and therefore worthless (free). Instead of paying for the products, people will pay for other things.

Immediacy - You pay to get it right away, becomes free later. Nonsense. A free copy can be made available as soon as a non-free copy, even sooner - see movies "released" on bit torrent before they show up in theaters.

Personalization - You pay to get it specially personalized the way you want it. Doesn't apply to a vast majority of products. His examples: book ending tailored to your preferences, aspirin tailored to your DNA are both ridiculous.

Interpretation - You pay for help with using the product. Again, applies to only a small minority of the products. Support for complex software is one, but how many other examples can you think of?

Authenticity -- You pay to ensure that the album is really performed by the band (his example). I don't even know what he means by that. Is there a big problem with people downloading a song by, say, Metallica, only to realize that it was actually performed by some other band? I don't think so.

Accessibility -- You pay somebody else to store your digital possessions and serve them to you on demand? Again, there may be a small value in that for certain things (backups etc) but I prefer to keep my music/movie/book etc collections on my own keychain, thank you very much.

Embodiment -- I guess what he means by this is that you may want to pay to have a fancy copy in some cases. For example, the book is free but you pay for a pretty old-fashioned hardcover binding or whatever.

Patronage -- You pay out of goodness of your heart because you want the musician/artist/author to make some money. Yeah right.

Findability -- You pay for a service that helps you find stuff that you want. Those are free now, but in the future they will become for pay, according to him.

I'm sorry, but if thats the best people can come up with as the "new" economy, we are screwed.

most free things have a real $$$$ cost

[petes_PoV]

Whether it's free software or a free sample or a "take it, it's free" giveaway of unsold items after a yard sale. Once you have something you start to make an investment in it. On the case of the free sample, the promoter hopes you'll like it and buy more. For free software you spend time installing it and trying it out. If you don't like it you spend more time removing it. With the unsold items, you spend real-estate in your home to house it (probably the reason it was up for sale to start with) and time to clean it when you do housekeeping.

So "free" doesn't really exist at all

To be better than free, an item has to pay you back for it's upkeep, care / feeding / maintenance and the time you spend using it, exploring it's potential and possibly the disposal costs if or when you toss it out.

In short to be better than free, it must make you a profit.

I've recently spend several days exploring a "free" CMS package for building websites. So far my time-cost has been well over $1000. In my view this package is certainly not free and may even be more costly than one I purchased for $500, but got my website built and operational in a day.

Free as in no-cost is a myth. In my mind "free" simply means disposable, with very few regrets.

Remember kids

[NewAndFresh]

Home Taping is Killing Music
(or to quote the Dead Kennedys on In God We Trust)
"Home taping is killing big business profits. We left this side blank so you can help."

Product vs. Service

[david_thornley]

One thing that struck me about the list of eight things is that very, very few people are going to get rich off them, while they will allow a very large number of people to make a good living.

The way to get rich is to sell a product, a single thing that you make (or at least design) once, and sell in very large quantities. If you do it right, you can take a certain amount of work you do, and use it to get money out of a whole lot of people. This is what the RIAA and MPAA are trying to do with songs and movies: sell the exact same thing millions of times.

The other way to make money is to provide a service. I make my living writing software for a company. They get my services, I get a continuing income that, while it pays for a nice lifestyle, isn't going to make me rich. (My current company does much the same thing: instead of selling the software, it supports the company in supplying a service very efficiently.) I do something specifically for the company, and they pay me.

The eight listed qualities of "better than free" are mostly services. They provide something personalized, or services that can't be sold indefinitely, or things that are of limited if positive value. That's extremely threatening to institutions like Microsoft or Disney, that have made oodles of money out of artificial scarcity.

It may well be that it will be much easier to make a good living in twenty or thirty years, but much harder to become rich. That doesn't sound bad to me, but there's going to be a whole lot of resistance by people with lots of money between now and then.

Re:centralization is an anomaly

[ChrisMaple]

For just one thing out of many possibilities, money is a safeguard against waste. Many people are already slobs, as a walk down many busy roads will demonstrate. With a requirement that things be paid for, people are less likely to discard things for trivial reasons. (My car ran out of gas. I'll get a new one.) Some people enjoy destroying things. If they have to pay for the things they destroy, they are less likely to destroy things.

Not all things are manufactured. People pay money for live performances.

On a more fundamental basis, you have attempted to destroy the word "value". Value has 2 generally accepted meanings.

• A desire. If I want something, I value it.
• A useful thing. Hammers are of value for driving nails into wood.

Neither of these aspects will go away as long as people live and act. Money, as a fungible and divisible system for quantifying and trading value, will not disappear.

Big projects are facilitated with money. Try building a vacation cruise ship with voluntary labor, donated materials, and no accounting system. It isn't going to happen.

Even your example of a sick neighbor falls apart quickly. Highly skilled brain surgeons are rare. If your sick neighbor needs one, and it's 300 miles to the nearest one of a good enough skill level, the surgeon is unlikely to perform his valued function for free. Occasionally maybe, but always? Why should he bother?

Re:centralization is an anomaly

[shmlco]

Ah, the quintessential communal system. Of course, one only has to go back to the sixties to see how many of those utopian societies survived.

And if barter systems worked so well, we wouldn't have evolved money way back in the day. Communication doesn't help, as small villages already had excellent word-of-mouth communication systems.

Everyone knows that Jim is a parasite who doesn't want to do any work. Now what? Let him starve? Jane does "favors" for the men. Is that work? Is that enough work? What if you don't need or want her favors and she needs one of your cabinets? And as mentioned above, some skill sets are more valuable. Many people can make cabinets, but the only brain surgeon around is Mike, who spent years learning to do what he does. And because of that Mike already has all of the cabinets he needs. Now what do you do? Run around trying to arrange a trade with someone else? Could be hard to do when you need surgery.

"But the thing is, when you can get a copy of any manufactured good you want dirt cheap, what good is money?"

IF you can get a copy of ANY manufactured good you want dirt cheap, then your argument may some hold water. But even "dirt cheap" isn't free.

how was it 'for free'?

[mgkimsal2]

This is not to say that this will hold for every author--public service broadcasters can't be expected to employ every content creator--but DA is a fine example of exactly how you can make money by giving stuff away for free.

Where exactly was the 'free' in this? The BBC is gov't run, funded by taxes. Maybe not a direct radio license in this case, but it collects money from people, hired a guy to write something, then gave the original people something back in return: the work it commissioned and paid for with the money it collected from the original population. I'm not sure I see anything 'free' here.

Re:the art world flourished....

[Jah-Wren Ryel]

Prepay only works if you can guarantee that the work will be completed Its called escrow.

also it puts a huge barrier to entry to anyone but the already established superstars. Jesus, is there a fucking echo in here? Didja read my second post in this thread where I addressed exactly that point?

Subscriptions don't work in general - it's the same problem. Most people prefer completed works so they don't have to wait for the next installment Have you heard of this thing called cabletv? You pay a subscription and you get your entertainment in weekly installments.

Subscriptions are also still subject to the "famous people sell the most" problem. Echo, echo, echo...

You're just pushing the issue of scarcity around. It's still the same system No, its not the same system, not by a long shot. The whole problem is that copyright is unenforceable because distribution is now practically free. But you can't distribute what hasn't been published, so that's the point where scarcity continues to exist and thus the point where creators can still enforce a contract.

Why not just enforce copyright, and then you get all the same benefits, but it actually works out to be better for the consumer - you know what you're buying, when you're buying it. The whole term of the deal is a known quantity and you're getting exactly what you pay for. People like to say such things without really thinking about them. Most people go to the movies with little knowledge of what they are in for beyond the reputations of the actors and director and tons and tons of advertising. Similarly with music where they tend to hear one song on the radio a million times (more tons and tons of advertising) and then buy the entire album. Similarly with books where they buy on the reputation of the author and tons and tons of advertising. Sure, you can go and point out that some people pay attention to reviews, but many reviews are just shills and the number of people who are devoted followers of reviews pretty small compared to those who are swayed by advertising. When comes down to brass tacks, very few people actually buy their entertainment as "known quantities."