November 2, 2007
freeconomics
My father e-mailed me this story from the Wall Street Journal. Scott Adams, the creator of the highly successful cartoon, Dilbert, writes about giving stuff for free on the net. It seems he’s had mixed results.
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.
That’s my guess. Free is more complicated than you’d think.
If I have noticed one thing to happen in the world of work these last twenty years, it is the massive blurring of the lines that separate work you get paid for, and work you do for free. These days, it’s not uncommon to meet people who work 30 – 50% of the time for free, especially among the bloggers.
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The question is than: if market value of music approaches zero, will the value of merchandising rise?
For instance: I’d prefer to spent 50 euro on a “special edition” album than pay 20 euro for a cd (or 9.99 for a mp3 album).
I really admire your blog.
I find that mixing a salaried job with freebies allows me to deduct the work done from freebies against my salary at self-assessment time. So “free” becomes at HM Government’s expense. Which, I suppose, will lead to higher taxes .…which will drive higher salaries which will make it even easier to get on the self-assessment bandwagon.
With the case of Radiohead, if their A&R man at the record company hadn’t promoted the shit out of them how would they fare? I mean, if nobody had heard of Radiohead, why would anyone care about another bland band releasing their music on the internet?
Oh yeah, it’s all in the marketing baby!
The idea of (a) ‘giving art/music away’ and the (b) building community from one’s customer base was pioneered ages ago by Grateful Dead. They actively encouraged people to freely copy and share their music and made their money in lots of other ways. $95m…a year at the peak! For a good summary read http://www.strategy-business.com/press/16635507/9095.
Not intending to just troll this, but I would contend that the market value of recorded music is pretty close to zero anyway. The real value.
Weird, I have the same debate going on at my website today. Looks like we’re on the same cycle or something.
I think free is a great marketing tool for creative artists, but not so much for the real world. Having no clearly defined value for creative work, a lot of us are forced to take the same roles as drug pushers. Give them the taste first and then start charging.
It’s true radio head wouldn’t have gotten anywhere if they hadn’t already been so well marketed. Yet as an artist starting out, you’ve got to release lots of things for free just to get your name out. We’ve just gotta smart about when to start charging and what to charge for.
That being said, I’ll always feel better about dumping cash down for vinyl. Mp3 compression just doesn’t float my boat.
A guy from the music industry I met at the recent Power to the Pixel event said that all recorded music is now seen as an advert for gigs — live events that you can’t really duplicated or pirate.
Maybe all creative industries will go this way???
Tim O’Reilly has discussed the tradeoffs at length — only in the context of piracy before voluntary free giveaways were quite as common as they are now:
http://tim.oreilly.com/pub/a/p2p/2002/12/11/piracy.html
This all assumes that success is measured in terms of dollars — free means money does not change hands.
Our approach to interactions have changed to the that we now have the “what’s in it for me” attitude as opposed to “if I offer this service for free likely my personal free services bank account will grow”.
I believe that a combination of free and paid for services is sustainable and that I am building my “free service” bank account.
When I need to withdraw from my bank accout I expect that the funds will be available (and at a very low interest rate)
This account forms the most powerful relationship between the provider and the recipient of free services even if only on a subconcious level.
My thoughts on working for free are mixed. It sets an expectation that working without compensation is acceptable, which I believe to be a negative norm. But working for free is why some inventions, pioneering ideas, and risky plays work — otherwise they would have been cost prohibitive. I would like to see more “barter” instead of “working for free”. That way, wealth is being shifted and we can continue to move the wheels of the economy with trade. One colleague suggested to me that not paying people on a commercial project is unethical. I would love to hear if other people agree/disagree.
If I were to take a guess, I’d say there’s more respect when a work is free to start (and then rises in value) versus when someone asking X price for something suddenly slashes said prices.
As Scott Adams said, he put his book out because he didn’t think enough people were willing to pay, and thus discounted his work. He reduced the value of said item by himself, not because people reduced it for him.
RadioHead’s acts caused the general value of their work to raise not because they discounted their work, but because to anyone who actually cared, the work was effectively discounted through iTunes and piracy anyway; this way, at least Radiohead got their money.
It’s a big difference between slashing your prices (and admitting your business model failed) and doing something for free to begin with.
Hey Hugh,
I’ve just recently discovered your blog. I love the “How to be Creative” piece.
I’m running into a similar issue as I develop WordPress themes. I’ve created one that took a lot of time and hard work. It’s been downloaded about 850 times and I’ve made about $0.50 from Adsense. I’m wondering now if charging $20 a pop and selling about three would have been a better option.
I come out with two opinions:
1. There’s probably a ratio where # of downloads outweighs immediate $. As in maybe 3000 downloads to every dollar. Because over time all that PR will trickle back in perceived authority in your field, links for Google to algorithm-ize, job offers, etc.
2. If you charge for it people will probably be more interested since it seemingly has some sort of value. Whereby generating more sales.
Okay, well, I’m done rambling. Thanks!
Wow! Eerie timing, considering I added your Widget to my blog last night. For free
Thanks!!
Ultimately I feel your expectations of the outcome drive your decision to give away things for free.
I would also take into account the end user and what they see as their perceived take-away.
For example, let’s say you…Hugh…are making an offer to give away all your cartoons for free in a download — or — to publish a book of all your cartoons done up all shiny and nice in a coffee-table type of book (with an autograph, even!) for a fee.
I’d pay to have the nice and shiny autographed version. Nicer presentation and more permanent to my way of thinking. My take-away thought is : content, presentation, end quality.
My 2 cents, for what it’s worth.
Genuinely creative people create, regardless of whether they’re paid to do so or not. In fact, supporting yourself with a day job, while doing creative stuff on your off hours (for little/no pay) seems to help convey the sense of artistic integrity which is crucial to so much art (and so lacking from so many professional / commercial artists). Check out Summer Pierre’s blog for a great commentary on this topic: http://www.summerpierre.com/2007/05/living-dream-with-day-job.html
Also, let’s acknowlege the “starving artist” model has been around for a very long time, and as far as I can tell, is quite sufficient to ensure humanity gets an occasional Van Gogh, etc.
As for my own experience, I give away the PDF version of a book I wrote (The Simplicity Cycle), because I think the value of an idea increases with familiarity. Interestingly, that free give-away has led to college professors buying big stacks to give their students, and at least one consultant buying a big stack to give to his clients (plus I get speaking invitations).
Maybe people are willing to purchase and give away hardcopies (which makes $$ for me) because I was willing to give away the softcopy version?
As an entertainer, I’ve been debating this issue with my fellow performers. We are “free” to most of our audiences, because they see us at events where they either paid to get in and we are part of the entertainment, or where the event itself is free, or where we pass the hat. In all cases, our services are paid for — either by the event organizers who need “free” things as part of their event to make money or generate goodwill in some sense, or by the audience themselves through their choice of an appropriate donation.
When we pass the hat at a no-admission-charge event, we make the most money. The key seems to be 1) a set-up of expectations, that the crowd arrives knowing they are expected to contribute and that we suggest $5 – 10 as a decent tip; and 2) critical mass, where the crowd is large enough that the people who can afford to give subsidize those who can’t. For us, this is the ideal content delivery system. We present the same show to everyone, and the fact that it is free to those who cannot pay encourages those who can to step up. Also, the quality of our content is high enough (intrinsically and compared to other content) that people often give more than they had planned or anticipated. In all cases where we pass the hat, it is relatively easy to walk away without giving, but they choose to anyway.
We also note that when delivering the “hat line” (the give us money speech before the finale), the more sincerely we express that we value their smiles and laughter as much as their money, the more money we actually get.
So we’ve actually been trying to figure out a way to give our content away free all the time! Sadly, US laws and custom do not make pure street performing (without a surrounding festival) profitable or pleasant. I wonder if there’s a larger idea here about the “surroundings” of a voluntary payment experience?
Rachel nailed it, that’s all I can say, really.
Free is indeed complicated. I think Adams is making a point about setting up expectations and boundaries. There’s a saying (I can only translate it from Spanish, but it’s probably universal): “give someone a hand, and they take the whole arm.“
Honestly, what you say in the last paragraph hits home. I’ve been looking at a lot of writing/blogging jobs on the net lately, and based on what some businesses are willing to pay, you might as well be working for free.
* The point above about ‘if they pay they perceive value’ is important… as is ‘if they pay, the feel they have control’ — that is, they can bitch and moan or show it off, etc. Free doesn’t make the ‘buyer’ feel special.
* Is blogging really work?