Pricelessness, complementary goods, and surplus

Rishab Ghosh makes a point that is vital to understanding how Internet information is different; it’s instantly interactive. Like he says, we aren’t online “just to read books, but to participate in discussions, to meet people and share ideas.” And this was a decade before, say, Twitter. It seems obvious but intriguing that the “Daily Me” allows everyone to craft their own “most valuable” content, often at no monetary cost. So we have a resource on which much content is generated by free volunteers, accessed by unpaying customers who desire it for intrinsic, not monetary, value. I like how he describes this as “pricelessness” rather than “valueless.” But how in the world do you make money in that environment? Provide better content? Target the few people willing to pay you for your specific content? He writes about his e-mail alerts which led to a growing subscriber base and wonders whether people might be willing to pay. But he gave it away, first. That’s one of many ironies on the Web. For example, we have fewer journalists, being paid less, but asked to create multimedia content so they’re working harder while being seen less. Then Ghosh hits the nail on the head – who should pay, the readers or the writers? Will foundation-supported news outlets like MinnPost and the St. Louis Beacon compete for readership to ensure the next round of Knight Foundation funding? Will online news outlets become like radio stations, giving away cash during “ratings” to increase audience?

Chris Anderson’s article about Free is fascinating. I wonder how many companies earn entire livings as complementary goods (like shaving cream)? It occurs to me that the opposite of this used to be payola. A record company or artist would pay a radio station to air a song so they could sell more and make their “investment” back. That was the carrot version – now the Recording Industry Association of America uses a stick – they’ll sue you for grabbing free content. Online I think this gets much more difficult than with shaving cream. For example, shaving cream runs out but you can always find another P2P download site; food spoils but a song digitized in 1995 sounds just as good now. And complementary goods are everywhere. There are multiple free browsers, open-source shareware to compete with licensed software, and perhaps thousands of sources for the same news story (you can’t avoid balloon boy). Is news a complementary good? Or is this the future of news: “anything that touches digital networks quickly feels the effect of falling costs”? Buried on page 6, Anderson writes about scarcity, reputation, attention, money and externalities. In an information economy, if free is what you want, free is what you get. Just hope your paycheck doesn’t depend on being paid for digital content.

Malcolm Gladwell shares a great quote from Stewart Brand – “information wants to be free.” Then a couple of sentences later he uses the word “bloodbath.” I feel like I’m reading about Armageddon – years of strife followed by the dawning of “a new role for professional journalists.” I’m starting to wonder what Anderson means by professional. However, the insight on the popularity of free Hershey’s kisses was fascinating. That’s why some newspapers argue that they have more readers than ever before, online – free is attractive. So how do journalism outlets get in on the “huge amounts of money ‘around’ the thing being given away” when they’re the thing being given away? Sure it’s good for Amazon or Google, but what’s the content worth. I think I just got nudged, for the first time, in the direction of the publishers who want to charge the aggregators for content.

Strong language from print against aggregators

Wow, check out all the strong language from the AP chief and News Corp's Rupert Murdoch:

"it is time for search engines and others who use news content for free to pay up"

"We content creators have been too slow to react to the free exploitation of news by third parties"

"We content creators must quickly and decisively act to take back control of our content"

"We will no longer tolerate the disconnect between people who devote themselves — at great human and economic cost — to gathering news of public interest and those who profit from it without supporting it"

"The aggregators and plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid content, it will be the content creators — the people in this hall — who will pay the ultimate price and the content kleptomaniacs who triumph"

Ironic that my link is on Google, hosting AP:
http://www.google.com/hostednews/ap/article/ALeqM5j-QHPkd1wPcAZL8SOqSTACDn33TgD9B7G7TG0