A terrific war of words has started up which anyone with the least interest in the future of media (whether advertising or what the advertising pays for) should pay attention to.
Chris Anderson, author of The Long Tail has a new book out entitled Free which in a nutshell says that the price of originating and distributing content is falling towards zero. When things are free people behave differently - a lot more get involved for starters. Free is one of the most powerful words a marketer can use. Therefore he argues we need to develop new business models to make money out of the bit which we can no longer charge for.
Malcolm Gladwell author of the Tipping Point and Blink among others is a journalist. Whose livelihood is directly threatened by the idea that whatever he writes has zero value and has to be given away, so he has to recoup some other way. Part of Anderson's response is an ad hominem argument that his professional reviewers are being paid to review him so are of course going to be hostile to their very future as professional writers. Which kind of stirs things up a bit - not very helpfully. Gladwell's argument is that what Anderson is proposing is nonsensical. If you can't make money providing something then a lot of commercial providers are going to stop providing it. Even aggregating vast audiences is pointless if in the end you lose money. As Youtube has done through its entire life.
This is Gladwell's review of Free. Which by the way you can read for free. Something Anderson points out.
And this is Anderson responding to Gladwell. Specifically on the issue of whether you need journalists or community managers who find good writers who will do it for nothing.
What Anderson doesn't respond to is Gladwell's challenge to his quoting of Levi Strauss from early in the 20th century when we were promised free electricity. That's what nuclear power offered. What Levi Strauss didn't factor in was infrastructure. It costs quite a lot to build and maintain a national distribution network. Which is what your electricity bill largely takes account of. The point is that free power has not meant zero electricity bills. Nor have free roads eliminated the need for road tax (or road metering). And free universal healthcare has not meant that nobody has to pay for it. We are charged in other ways.
This is probably the central debate in business. Want lots of customers? Give it away. Want to make money? Sell your business to someone who thinks they can make money out of all those people. Want to run a sustainable business which doesn't cost your customers anything? Well we're still working on it.
Based on the revenue Apple are making from the appstore they could give the Iphone away. Based on the Star Wars merchandise that Spielberg sold he could afford to give away the cinema tickets for nothing. There are 2 opposing questions. Why should my customers pay for anything? And why shouldn't a business make as much money as it can? Apple are making money from handsets and from content. It is now possible to reshape the value chain in such a way that chunks can be given away. But it can't all be given away. Otherwise there will be no business to run.
Giving a moral impetus to the notion that if something can be free that it OUGHT to be seems to me to be thoroughly peculiar. Isn't that what got us into our present environmental crisis. Because there was no one there to price environmental degredation out of reach - companies and nations simply helped themselves.
The trouble with free is that it makes contracts pointless. I get offered lots of free stuff. And of course I say yes. But strangely enough if I have enough freebies around it doesn't put me under any obligation to consume/use what I have been given for nothing. If I have had to pay for something I am more likely to use it because it has cost me. If it fails to perform I ask for restitution/repair of some kind. The price of content is falling towards zero. Which means we are either sitting around like kings with unimaginable wealth (true) or we are sitting around in a junkyard full of stuff that we don't have time to look at, which we are unable to evaluate and prioritise (also true).
There's a story about the city of Babylon which was so wealthy that it was reguarly attacked and taken. But the invaders found the wealth was too heavy to carry away so they just sat on top of it until the next lot of invaders arrived. We need a better driver than free - Something you get a return from. Free isn't enough. Free is junk.
Anderson is going to be speaking at the RSA tonight in case any of you are a) in range and b) lucky enough to get in. This one is going to run and run. And run!
