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The Economics of Free
Wired's editor-in-chief Chris Anderson is working on a new book, to be published next year, about the idea of "free" in the old and new economies. Wired is running a long excerpt from the book and some sidebars about the economics of giving away, e.g., CDs and directory assistance. Techdirt has a few quibbles about Anderson's ideas — mostly areas in which he may be shading the argument to sell more books — but mostly buys that the equations of economics continue to work when zeros are plugged in in judicious places.
Free, eh?
Lets see what he says when his book ends up on Piratebay. He is giving away the book for free, right?
Well, I started using Linux a while back, and now I'm addicted... I don't want to use anything else ever again... every time there's a new kernel, I must have it... a thousand curses on Linus, who has enslaved me to his operating system... I have learned so much since I started, that I am no longer ignorant - Linux isn't free - it costs you your bliss.
The sheer elation that you get from the freedom provided is definitely not worth the ignorance lost. So remember folks, don't use free stuff because you might learn something, and that would be terrible.
Just like the /. article today about Microsoft saying that several ad impressions work together to persuade a consumer to part with some of his money, this Wired article points to the same phenomena. Someone selling a product will spend money on marketing... he can buy ads on radio or TV or the web, he can get posters and go around stapling them to telephone poles, or he can give out freebies of his product so the potential purchaser can experience the product for himself. All of the above will work together to try to get consumers to buy. Just marketing...
I really don't see the big statement he is trying to make.
It all boils down to:
- give some X for free so they buy more X later
- give X for free and sell supplies for X
- give X for free and sell advertising on X
All done for many years by such a diverse group as drug dealers, razor manufacturers and magazine publishers. There is not a single example in the article that doesn't fall into one of those three categories.
It may be true that the Internet is a making that kind of marketing much easier and more common, and it may be an interesting subject for a book. However his approach is needlessly sensationalist: "$0.00 is the future of business", "free changes everything", "freeconomics" etc. It's worth remembering that the same laws of economics (and laws of nature) still apply as they always have. A business can only survive if it sells its products for more money than they cost to produce. The rest is just marketing tactics.
Negative moral value of force outweighs the positive value of good intentions.
Basically, whoever is rich is someone who's smart enough to figure out how to get other people to perform labor for him. The pyramids were built without money, (as far as we know,) yet we would consider the pharaohs very rich.
In a free economy, the rich person is whoever can figure out how to get the most people to labor his benefit. One becomes rich by organizing labor so that everyone benefits. The challenge is finding a motivation technique that can satisfy laborers more then money.
No, I will not work for your startup
Yeah, see... Most people don't use computers to learn more about them any more than they (sorry in advance) drive cars to learn about them. They do both to solve problems in their lives. Linux solves basically none of my problems and meets none of my requirements of a computer.
I respect playing with things to learn. I play with Linux, too. But I work with OSX and Windows.
You're not better than people who don't care to learn about computers; you just have different interests. I know a lot about tuning 50cc scooters to go way faster than they should (and have, unfortunately, the 30-day suspension on my license to prove it). But I don't denigrate people who just want to hop on one and go to the store and back. They're not dumb or lazy; they just don't care.
So, while I'm glad you enjoy editing .conf files, I encourage you to explore the possibility that people who don't just... don't.
Where are the linux billionaires?
Spread all around the economy, ranging from Google to mom'n'pop shops. The linux billionaires are those who _use_ linux and save money. Coincidentally, the very same are often those who invest time back to solve their own problems, as the money they save far, far outweighs the money it'd cost to roll their own from scratch.
The fact that someone is making money from monopoly protections does not mean that it's good for the economy as a whole. We could hand out monopoly rights for air, and you'd get a huge AirCo, developing amazing technology for measuring how much air each person was using and charging for it. They'd certainly make money, but we'd all be poorer by paying for a resources that would have been produced anyway.
Linux, BSD, and all Free Software proves that software would be produced anyway.
If anyone could just copy chips we'd get the same economy there. There are many 'open chip' projects around.
The purpose of the economy isn't about 'making money'. The purpose of the free market economy is to maximize the creation of wealth by encouraging competition in overcharging sectors and constantly lowering the costs of production. When the cost of production reaches zero we've all won; we've got infinite wealth.
You're not better than people who don't care to learn about computers; you just have different interests.
:-)
This statement needs a bit of clarification before I can argue with it. As it would be too slow to ask for clarification I'm going to assume the following:
- stuff the people don't care to learn is stuff like intermediate and advanced levels of configuration, programming, CLI and the like, but also set theory, theory of data, theory of communication etc.
- the better you are referring to is not ethical, but mainly economical, societal and utilitarian.
First off, I would want to agree with you that people do need to make decisions about what to learn. Even though you will spread that learning throughout your whole life there's just too much stuff to know. However, it a dangerous self-deception to think that you can ignore computers and not have negative consequences to yourself in terms of your economic prospects, your fitness to society and your personal happiness.
It is really hard say what level of knowledge with computer should be considered a citizen skill(*), but it is more than basic OS usage and knowledge of specific applications. I think people should be able to command their computers. To this logic and set theory are most important, although any specific formalism unimportant and those used by experts of the particular fields are probably counterproductive. A working knowledge of a general command language is probably a must, although you may be able to get by with GUIs. A general command language is of course also a programming language, but don't let that fool you. Programming (i.e. building computational systems) isn't part of the operational ability to command a computer.
For better or worse, computer skills aren't just another technical skill that might be fun to have. Computers are the foundations of our current and future prosperity. They are the means of production and communication of our societies. Computer knowledge is power. Computers can't be just a purview of engineers.
(*) A skill nearly every citizen has or is expected to acquire. I know this is a very Finnish concept, but I'm not ashamed of that.
Computers are useless. They can only give you answers - Pablo Picasso
Linux is number one OS in science, in algorithms, in calculating stuff that matters. On Linux I verify genomic annotations, find distant relationships, parse scientific texts for data mining (extracting scientific facts). I code all of it too.
On Windows I submit weekly reports about hours and answer emails of people who are lazy enough to lift their behinds and walk 10 feet into my office, I write documentation that nobody reads, I waste my time browsing websites.
Linux makes me think. Windows makes me a slob.
I do not believe in karma. "Funny"=-6. Do good and forbid evil. Yours, Oft-Offtopic Flamebaiting Troll.
If you read the article, or even remotely follow the argument, he isn't saying that people should give things away, he is saying that there are new ways to profit in an environment where distribution is as good as free.
He also wrote the book The Long Tail, which was a New York Times best seller. He made a lot of money from that, despite the fact that he wrote the book in public view and with public input on his blog thelongtail.com. In fact if you go to that blog right now you will see him discussing the monetary benefits of giving away books.
I don't think it hurts his credibility that he sells the book, actually I think it helps him. Lawrence Lessig's book has a higher purpose of promoting free culture, while Chris Anderson's book is simply observing the changing state of economy. Mr. Anderson is already using the techniques he outlines by giving a long excerpt, and blogging about the contents of his book.
"how can they call it a MINE if everything here is THEIRS?!?!" -Straight Jacket