The Long Tail

When is my industry going to stop lying?

I love magazines, but the way we treat our readers is infuriating. I've already explained the perverse economic incentives that result in us carpet bombing the world with "blow-in" subscription cards. Now I want to highlight the subscription offers that magazines send through the mail. They're full of lies.

Here's one I got today, which I've taken the liberty of annotating:

As you have no doubt guessed:

• there is no such thing as a "special courtesy rate"
• "guaranteed savings" is a meaningless phrase (and indeed you can often find magazine subscriptions cheaper through an agent--check eBay--or a credit card loyalty program)
• it makes no difference if you reply by the "reply by" date
• "statement of benefits itemization" are just empty words meant to invoke an invoice
• all those "free" or "included" things are just the regular content that's in the mag for everyone. 

Why do magazine circulation departments treat people like idiots? Well, sadly you know the answer to that one, too: because it works. Is the sort of reader who responds to this kind of insultingly dumb deceit really the target audience for this magazine?

(To anticipate the obvious response: yes, our own Wired subscription offers use some of these tricks, too. But the good news is that these are largely legacy issues, and we've got a new team in our circulation department that is revamping all of our marketing materials, shifting much of that job to the web. It won't happen overnight, but the first step of the cure is admitting that you've got a problem, etc...)

(And to anticipate the other obvious question: yes, I subscribed anyway. But on the website, not by responding to this moronic letter.)

a flight across Europe for $10 is indistinguishable from magic

Last week and most of the week before I was in Spain, Portugal and Italy giving speeches and visiting companies. Whenever I could I talked to people about "free". Here's what I've learned: people are confused by, and often suspicious of, that word and the trend towards the price of zero, I got the same questions again and again:

1. So nobody's going to make any money?
2. Does any of this go beyond simply paying for things with advertising?
3. You don't mean actually free, do you?
4. This is just online, right?
5. Is this some sort of trick?

The answers, in short form, are these:

What Free Is--And Is Not.

1) You can make loads of money by giving things away. The key is who you're making money from. Google's products are almost all free to the consumer, but Google makes billions from the advertisers who pay to reach those consumers.This is just the application of the century-old media model--"free-to-air" TV and radio, and newspapers subsidized by advertising to a fraction of their real cost--to any industry that can be turned into a digital product or service.

Think of these markets not as a two-way relationship between buyers and sellers, but a three-way relationship where the third party can be drawn in by something free that creates the product to be sold  (in the case of advertising, this "product" is the fabled "eyeballs" that advertisers buy).

2) Okay, so you get that--advertising can make things free. But that's just part of the much bigger opportunity in redefining markets so that you can give away one thing to sell another. Take flying. As Kevin Kelly notes, not long ago airlines scoffed at the notion that you could give away airlines seats. Then RyanAir, EasyJet and, at latest count, nearly 30 other European low-cost carriers lowered the cost of a seat to as little as five pounds ($10). Yes, five pounds.

How? By redefining what business they're in. They're not selling seats, they're selling transportation. They sell hotel and rental car reservations to passengers. They sell tourists to the smaller cities the carriers serve (the payment is in the form of the huge discounts they get on landing fees). They sell cargo shipment to the companies that put packages in the hold (which is why the low-cost carriers tend to charge extra for baggage). They even make money off the food and drink they sell on board.

3) Is there really such a thing as a free lunch? Actually, there sometimes is. Craigslist really is free. Wikipedia really is free. Nobody is "monetizing your attention". It's all thanks to a combination of the falling technology costs of Moore's Law with the Gift Economy. There really are no strings attached.

Other times, there are strings attached. Advertising clutters your page. You're pitched upgrades. Limits are imposed. You're upsold to different products or locked into something very much not free. The difference is this latter category used to be the only category of free. Now it must compete with really free. And the newer category is growing fast.

4) Yes, this is felt mostly on web, which is essentially built on free (a joke of the bubble era was there were only two numbers online: zero and infinity; sobriety has only eliminated the second), but it starting to also have influence offline. What the web's near-zero marginal costs encourage is for other industries to turn as many of their jobs as possible into software, so they can benefit from digital efficiencies, which gives them more flexibility over pricing. That's part of the reason why Ryanair and its kin can charge so little for airline seats: virtually all their sales and customer support are done through their website.

And when bands in Brazil let street venders freely copy and sell their CDs so as to promote their concerts, this is taking advantage of the near-zero marginal costs of pirate distribution, a streetcorner network of people nearly as efficient as a Cisco route. 

5) Finally, is this a trick? Well, yes, sometimes it is. But not a deceit, just an appeal to psychology. "Free" has a power to entice. It grabs the attention, and no more so than when it really does appear to involve some sort of magic. And let me tell you, a flight across Europe for five pounds is indistinguishable from magic. Not quite free, but close enough to fire the imagination. What else could cost almost nothing?

The future is already here, it's just unevenly distributed

It's an odd feeling when your life could be a setting for a William Gibson sci-fi novel. This morning I finished the code for the Lego UAV that navigates using a Bluetooth GPS receiver (the world's second Lego GPS bot, I think). This afternoon, we went to beach with the kids and I started Gibson's latest, Spook Country, which he's said is set in a present that represents the arrival of the future predicted in his previous books.

• On page one, the bleeding edge of the present is illustrated by a Lego robot.
• On page two, the protagonist's future-arrived credentials are that she writes for Node, a "European version of Wired."
• Later on page two, we learn that the Lego robot is carrying a GPS sensor.

Given that the editor of Wired created the world's second GPS-enabled Lego robot on the very morning he read that, I'd say that Gibson's grasp of the present is impeccable.

Next: Free Cars!

What can be made free? A better question is what can't be? My friend Shai Agassi, who until recently ran technology at SAP, got a load of press this week about his new venture, which aims to create the largest electric car company in the world. Details won't be announced until December, but the basic concept is that you'll pay for the electricity, not the car. Think razors and blades, or companies giving away free cellphones to lock you into a monthly contract of minutes.

He's got a blog, cheekily called The Long Tailpipe, and here's one mind-blowing fact from his most recent post on the effect of current oil prices:

The cost of the average used car in Europe is now cheaper than the cost of gasoline to drive it for a year.

That's why "free" cars make sense: because the purchase price is now a small fraction of their lifetime costs. Shai's company is taking a bigger view of the business they're in--rather than selling cars, they're selling personal transportation, and charging a rate proportional to use. When fuel seemed nearly free compared to price of the car, companies sold cars. Now cars seem nearly free compared to the cost of the fuel. Thus an opportunity for a car company that thinks different.

(Picture taken by me on a tour Shai and I took earlier this year of the Sacramento Municipal Utility District electricity control center, part of our ongoing effort to understand the economics of electricity better.)

"Free is more complicated than you think"

Last week, Scott Adams, the Dilbert cartoonist, wrote a column (sub req'd) in the Wall Street Journal entitled "Giving Stuff Away on the Internet". It told a cautionary tale of his experiences in free distribution of his cartoons and books online (there's a good summary here). The key passage is this:

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

Given that I'm writing a book called FREE, exploring the many ways to make money by giving things away for free, you might imagine I'd have thoughts about this. But first let's hear from someone smarter than me, Tim O'Reilly:

We find that making a book freely available can help visibility and sales of a book on a little-known topic, but for a well-known topic or author, who benefits little from the additional exposure (like Scott Adams), it can have a slight cannibalization effect on print sales. So, as a beginning science fiction author, Cory Doctorow used "free" to build his career, while Stephen King found the results of his experiments with free to be disappointing.

I plan to make as many versions as possible of FREE, well,  free, starting with the MP3 audiobook and possibly including a sponsored physical book. Is this going to backfire, given that I'm already on the well-known side of the equation?

Well, if all I wanted to do was sell books, it might (although I doubt it, given the usability benefits of the physical form of a serious book. After all, giving away a pdf version of his book on net policy and economics helped Yochai Benkler sell more hardcover books than he would have otherwise. 500+ pages is a lot to print out, to say nothing of reading on-screen).

But I don't just want to sell books. I also want to:

• Write better books. As Adams writes: "Over time, I noticed something unexpected and wonderful was happening with the blog. I had an army of volunteer editors, and they never slept. The readers were changing the course of my writing in real time. I would post my thoughts on a topic, and the masses told me what they thought of the day's offering without holding anything back....At some point I realized we were collectively writing a book, or at least the guts of one." Free content catalyzes conversations.
• Expand and promote an idea, which is not just something I believe in but will also benefit me and my magazine by association.
• Give speeches, customizing my analysis and research for specific companies and industries. The free book is simply marketing for that, which can be more lucrative than book royalties.
• And who knows what else? Free distribution will put the book, in one form or another, into the widest number of hands possible. I'm not quite sure how I'll monetize that reach, if I can at all. But the problem of making money indirectly from attention seems like a great problem to have.

Note that Scott Adam is not a critic of free--he's a free pioneer, putting his strip online at a time when others were charging for theirs, and he also reaps rich psychic rewards: "After 18 years of writing Dilbert comics, I was itching to slip the leash and just once write 'turd' without getting an email from my editor." Adams may not need more money, but we all need more freedom to do what we want to do.

Unlike simply selling what we make, free requires creative thinking about how to make money around what we make. That is, as Adams says, "complicated". Which is why I think there's a book in it.

PR Blockage: The Aftermath

So it seems I struck a chord. My post on blocking people and companies who send me mass-mailed, indiscriminate press releases and other announcements that I didn't ask for and show no awareness of my interests is now heading towards 300 comments, which is a record for this blog.

A few thoughts, reactions and clarifications:

• Some people misunderstood what is being blocked. It is just the senders' email address, not the entire domain. I treat the offenders as individuals, and never make the mistake of assuming that their colleagues share their bad habits.
• Some people were amazed that I would put so much time into creating and organizing the list. I didn't. Pressing "Block sender" is as easy as pressing "Delete" and outputting the list in Outlook took three clicks and ten seconds: "Junk Mail Options/Blocked Senders/Export to file."
• Many people wrote to apologize, promising to reform their ways, and asked to be taken off the list. I've written to all of them to thank them for their commitment to change, but I'm not going to undo history. The list, like mutual funds, reflects past behavior but does not necessarily indicate future performance.
• Chiandra Teitscheid from the National Geography Society wrote:

  You probably already know that we publicists use a mediasource database called Cision. If not, it's a paid service we have that gives us all of the media's contact info, and also lists pitching tips for people. Now, I don't know why any publicist would pitch the editor-in-chief of a mag, but thought I would let you know what the listing for your name says under pitching tips (in case you were wondering.)

  Pitching Tips:

  Anderson is the Editor in Chief. He heads the staff and oversees the design and direction of the publication. The assistant editor is the primary point of contact for the magazine. Send press releases to the general e-mail address.

So not only are people using lists, they're not even following the advice on those lists.

• Amusing secondary effects include people pitching their business in the comments (which I thought was fine, btw), and even PR companies emailing the clients of people on the list and encouraging them to switch firms. "We're not on the list!" is their marketing tactic. Wow. [UPDATE: holy crap!]

Mediabistro's PRNewser interviewed me about the episode, asking if any PR pitches work with me, and you can read my answer there. It starts like this:

Yes, many pitches have “worked”, which is to say that I have a great relationship with many PR people, mostly because they’ve taken the time to get to know my interests, read what I write, and otherwise contact me with ideas that are relevant. The best of them do such a good job at working with me on things I’m following that I think of them as friends and colleagues. [read on]

Finally, of all the great comments, this is my favorite, from David Calkin. Excerpts:

Chris says: "Second, you're wrong about us not publishing contact info. Most stories we run have the author's email address included. Here's a crazy idea: how about you actually read what we write, take time to find out what reporters specialize in what topics, and only email the ones that seem to cover the topic you're pushing?"

That's how my tiny little company built up an incredible dB of press folks who love my missives. I read a story relevant to our business (robots), I grab their email and add 'em to my dB. It never - no really - never once occurred to me to buy one of those "contact" lists that PR firms hawk. Almost every email I send to my "spam list" (self titled), gets some sort of reply. Like "Cool event, can't make it - sorry. Keep me posted on the next one" Or "Wow, can we get two press passes." Or most often, "Can you email us contestants in our constituency so we can interview them for the local angle?"

Of the 1500 or so people (note, "people" not "titles") in my self-collected db, I think I've gotten 10 un-subscribes. All of whom just switched jobs. There's no one in our dB that covers the weather. Or wars. Or fluffy little kittens. They all cover tech, robots, AI, etc. And they LIKE getting my "spam."

....

My advice to those who loathe Chris' response to these spams - listen to him. All he's really asking is for you to do your job. Your job is PUBLIC F-ING RELATIONS. If you're pissing off your public - which you are - it's time to change your methods, and - oh, how can I put this - you need to learn to better "relate" to your "public."