Monday, January 25, 2010

Free, Again

Last summer, I wrote two posts about online profit models (or the lack thereof). The first of them was pegged to an interview with Chris Anderson, author of Free: The Future of a Radical Price. The second was a briefer follow-up inspired by a post (and the ensuing comments about it) by Levi Asher. OK, bear with me for all this preface—this is what I get for letting something sit around for six months. My latter post elicited a direct response from Asher, and that’s what I address (mostly) below. When there’s a quote from Asher, it comes from that response of his (in July). Asher has just recently posted about the issue again, inspired by the same story that’s inspiring me to revisit the debate, which is the news that the New York Times is planning to institute an online paywall of some type in the not too distant future. I’ll say that this most recent post from Asher seems more specific and tempered, and as such more useful. But I’m returning to July, when things seemed broader to me:

Let me just start by saying that I’m not arguing, nor was I arguing in the summer, against the idea that many things of value in a culture can be offered to consumers free. For instance, I’ve been writing this blog for more than five years now, and I haven’t made a penny. Now, the value of this blog is highly debatable, but let’s at least say that some people find it somewhat valuable. We can then apply that principle to projects with larger audiences than this one, which is almost every other project on Earth.

This was how Asher started his response:
I'll try to offer a substantive response to the idea that we must pay for things of value. However, I find the idea almost too childish to entertain.
I’m perfectly willing to say that the Internet has changed the way we have to have this conversation (of course), but thinking that the very idea of paying for things of value is “too childish to entertain” is hardly a promising start to a rational debate. Basic economics will tell you that you pay for everything one way or another.

Asher continued:
First of all, just as we can name things of value that we pay for, we can also easily name things of value that we don't pay for. The Office. Music on the car radio. Outdoor sculptures and great urban architecture. Oh yeah, and then there's free news and commentary on the Internet which, plain and simple, we are already not paying for.
I wasn’t trying to imply that consumers have to pay money for everything of value. Though I will say that in the case of everything Asher listed, someone gets paid. The architects, the builders, the actors, the DJs, the car-radio manufacturers—even, in the case of the web, the most prominent news bloggers (most of whom are simply aggregating news from more traditional sources, like the New York Times). If, tomorrow, we insisted that urban architects need not be paid, since there are architecture enthusiasts willing to work for free, the quality of urban architecture would not benefit.

If we want to examine this classic “rule of paying for things of value,” let's consider one of the many masterpieces of nature: the orange. This weekend I bought an entire bag of delicious fresh Florida oranges—marvelous, ingenious, healthy and beautiful things, really—for about two bucks. Taken purely for its value, a single orange could easily be worth five dollars. Likewise, taken purely for its value, a bottle of corn-syrup-flavored orange soda shouldn't cost more than ten cents. But these hypothetical prices don't correspond to the real world. We never actually pay for things according to their value. We pay for things according to the law of supply and demand.
Yes. But the law of supply and demand lends itself to an economic view of things. Insisting, like Chris Anderson does, that entire industries can operate on the principle of “free” is an argument against the very idea of economics. As such, the sentence, “Taken purely for its value, a single orange could easily be worth five dollars” makes no sense. I’m not denying the existence of supply and demand or its role in creating value—I’m saying that when the unbending demand is “free,” there will be consequences for the supply.

When John Williams declares that we pay for things according to their value, he is doing no more than expressing a keening wish. Declaring that we pay for things according to their value is like declaring that we will stay young forever, or that there will be no more crime. It's nice to think such things, but they never were true and they're still not.
Again, I don’t (and wouldn’t want to) determine the fixed value of anything. I don’t care whether people pay to watch HBO or not. I also don’t care if people pay for something that I think they are overvaluing (there are fully functional citizens who pay $25 and more for novels written by James Patterson, which blows my mind). I don’t think The Wire or the Empire State Building or a bag of oranges is worth any particular amount, I just think they’re worth something. Asher says I declare “we pay for things according to their value,” but that’s not exactly right—it’s more that how much we value things plays a role in what we will pay for them. Yes, The Office is free on NBC, and NBC has a model that works well enough (for now) to pay the people responsible for The Office. If NBC folded and the show moved to, say, HBO or Showtime, there are fans who might be willing to consider buying those channels in order to keep watching the show.

In his original post, Asher wrote, “If the New York Times puts its web content behind a payment wall, that will be the end of my lifelong relationship with the New York Times.” And in his most recent: “I will certainly be paying less attention to the New York Times once it removes itself from the currency of real-time dialogue on the web, and of course my long-running love story with the New York Times Book Review will end once the publication ceases to be openly available to all readers.” This is a large, complex issue, and I’m not saying I have easy answers—but these sentiments just seem flatly illogical (and self-defeating) to me. The basic idea expressed is “I loved this thing that I used to pay for, then I (unsustainably, according to current economics) got it for free, and now I’d rather be without it than pay for it.” For what reason? To prove a point that everything should now be free? What if, functionally, it can’t be free? What if the only way to read the New York Times Book Review was to pay 50 cents a week for it? Would it be worth financially supporting something you valued, if your support was the only thing keeping it alive? Questions like these seem suddenly irrelevant to people like Asher, which just surprises me more than anything else. It's like the complicated idea of value has been replaced by the simplistic, unyielding demand for free.


Anonymous Nick said...

Good post, JW. To amplify a couple of your points: a number of the things that Asher suggests are free, we do in fact pay for. We pay for The Office and music on the car radio by sitting through ads. (And if you think inactive attention doesn't have monetary value, tell a security guard.) We pay for outdoor sculptures with tax money, by and large. Now, the ad model is changing, because of Google and lots of other things. But the fact remains that the cultural endeavors supported by ads - journalism, TV, etc. - must have value, simply because millions of people consume them. For the moment, the market is skewed, because consumers are able to use these products without paying (a state of affairs classically known as "stealing"). But this can last only as long as it takes people to realize that without the Times' paying millions of dollars a year to put reporters in the field, none of the commentators who piggyback their work can continue to exist.

10:34 PM  
Blogger Dezmond said...

Asher's a socialist.

11:13 PM  
Anonymous pf said...

Exceedingly well argued, JW. What bothers me in Asher's argument is not so much that he denies some basic premise of economics (since any economic system is in some ways arbitrary), but more that it denies the reality of the economic system we live in. I'd happily provide the world with free oranges, sculptures, and TV shows if my needs for shelter, food, health care, and the occasional Faberge egg (all at my discretion) were met in return.

2:37 PM  
Blogger Levi Asher said...

Always happy to respond, John ...

And, well, if Barack Obama is a socialist then I guess I'll be one too.

9:56 PM  

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