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January 30, 2008

Comments

Michael Long

"When music comes free by way of friends burning CDs ... Of course the Web is built mostly on two nonmonetary economies, attention (traffic) and reputation (links)."

RIght. And since the music is already on the CD your "friend" burned, what are the odds that for most of the music (or ANY of the music) you're ever going to visit a website?

And forget the "introduced to new artists" line too. Numbers have shown pretty clearly by the number of trackers that the most popular "known" artists are the ones who get "shared" the most.

Most of the "free" models list fall into three camps: advertising (at a time when AdBlocker use is rampant), sponsors (or "patrons", if you can get them), or subscriptions/donations (e.g. begging).

Most of which don't scale, don't work when everyone else is doing the same thing, aren't wanted, and are subject to "free rider" problems and constraints.

John Banfill

Consumers will try and obtain the best value. Value can be defined as usefulness divided by cost. As the cost goes down the value increases. If there is no cost, the value increases without limit.

Publishers are not considering the advertising value of free copies which have a marginal cost of zero. They will either see the folly of their petty, greedy ways or be run over by the tide of abundance.

Daryl

Hi, Chris, been following the blog for a little while now. I definitely agree with you that free is much more valuable than people think. If I'm given a part of something (a chapter of a book) for free and it makes me go buy it and read it, that's a good book. If it doesn't make me buy it, then there's a problem with the product itself, and whether it's free or not is a moot point.

I posted something yesterday about how I think Avenue Q should be distributing tracks/videos for free online. Would love to know what you think.

Bill Hibbler

I agree with the ability to monetize eyeballs on a website with adsense, affiliate links and straight advertising but that's not much use to Sheryl Crow.

A new artist might gain more exposure to increase their ability to tour but I doubt friends 'sharing' a CD is going to increase Sheryl's bottom line. She, and artists like her, are losing money. What's worse, this problem has led record labels to demanding a percentage of touring and merchandise sales and they've already been dipping into publishing income for years.

Phillip

I agree that value does not equal money.
the value of being distributed wildly should appeal to all artists -
monetization of the art will require adjustment - eg. Madonna and concert-promotion monster Live Nation.

Nathan Bowers

Free has tons of monetary value. Just ask MySQL and Wordpress.

TV networks and cable producers still haven't fully embraced free online distribution even though it's far superior to the current broadcast model. With online distribution you can track show popularity and advertise with precision that would put Nielsen out of business. Plus you could leverage the huge back catalog and pre-time shift everything, everyone wins. Maybe residuals contracts are too cumbersome and it's easier to stick with the existing model, or maybe it's just fat lazy entrenched Hollywood inertia.

As for Sheryl Crow and the RIAA? They are so doomed and clueless it's sadly hilarious.

PiriketSeverler

I agree with the ability to monetize eyeballs on a website with adsense, affiliate links and straight advertising but that's not much use to Sheryl Crow.
www.piriketseverler.tr.gg

Michael Edwards

Chris,
Great blog. Thanks for the free content. Because of this free content I've purchased your book.

How does an artist make money when they give away their product?

If you say concerts, I'll counter with the notion that few people enjoy concerts compared to the grand scheme of who buys the music.

Francis Hamit

Chris:

I am not opposed to sampling, or sending free review copies. (Reviewing is work and I don't expect people to pay in order to do their work.) My problem is with those who think everything on the Internet should be free. I had a local (print publication) editor hit me up for free copy so that I "could give back to the community". I asked her if she had tried that at the local supermarket. More to the point I should have asked her if her publication was free or if the ads were free. I am sure she would have said no, yet she has no problem asking people for free copy in exchange for a byline. You see the problem here? It's not just the money (and if we are never paid, how are we to live?), it's the disrespect. Somehow, my work is worth less than hers.

Which relegates what I do to the status of a hobby rather than a profession. Here is a concept to chew on; a copyright is property. It is property produced by doing original creative work that has value in the marketplace. As the Long Tail proves, someone will pay for it. It is also property protected by law and international treaty and a Constitutional right.
Beyond that, the law gives creators a moral right to control how and where the work is distributed and in what forms it can be copied. Those rights can only be altered by written contract or the declared intent of the creator(s) to share the work without compensation. If you choose to do that then that is your right as well, but it is not your right to insist that the rest of us do likewise. The workman is worthy of his hire.

Michael Martine

Perhaps Ms Crow would like it if nobody knew who she was or listened to her at all?

Pirated/Creative Commons = known = mindshare = fame/opportunity for other forms of income

Blocked/Sued/Sold = less known = no mindshare = no fame/opportunity

There are so many artists in so many fields from writing to music and beyond proving every day there's a new way that those who don't accept it are being willfully ignorant of the deep sea-change that's happening. Frankly, the most shocking way to put it is to say that piracy is a business model--one that is currently only recognized as such by people who are living in the present, instead of the past. If you have to ask who the dinosaur is in the room, it's probably you.

jeff goldfarb

Money may not be the only way to express value, but imposing a 'for free' business model on others devalues not only their work but their right to control it. An artist should have the right to choose how to, or whether to monitize their work.

You are right that money is not the only way to assign value. In todays economy driven society is is close, though. Finally, if you have so little control as to be unable to demand fair compensation for your work, neither you nor your work are valued in any sense of the word.

Jacob Morgan

Hi Chris,

There is a small Indian restaurant near my apartment that offers free milk tea to those who eat there. Out of all the Indian restaurants near the area they are the only ones with free tea. As a result they have lines going out the door. I talk about this more on my blog but I think this is a great example of how something free can add so much value to a business.

Jacob
www.jmorganmarketing.com

Russell Warner

It's funny, living in this day and age, it seems like the promotional giveaway is such a novel idea, but actually Jell-O (Then owned by the Genesee Pure Food Company) pioneered the idea. They'd bought the patent in 1902 but the product wasn't performing well until 1904 when Genesee sent our hoards of salesman armed with free Jell-O cookbooks. The salesman gave them away and then went to the local grocers, essentially saying, "We've just introduced hundreds of consumers to this new product, maybe you would like to stock some in case they come looking for it?"

I don't know how original even that "campaign" was, but it's one of the first I've ever been able to find on the record.

John Banfill

Wall Drug in South Dakota became a success and made a huge tourist attraction by offering free ice water to travelers from the 1930s till present. Good article in Wikipedia about them. http://en.wikipedia.org/wiki/Wall_Drug

Chris Anderson

Russell, John--

Those are great examples, thanks! They'll make it into the book for sure...

A

Well its pretty to say that value is more than just money, but that don't help when you need food... ;)
Yes, there's a big trend towards free, but have you seen where it's going? As more and more people jump on the bandwagon of giving away free content as a way to entice people, the airwaves become jammed with so much free content that a) the individual value of any given piece of content tends towards zero and b) why should people buy your stuff when they know they can just get more free stuff?
Consumers have an infinite array of choices now, and not enough time.
Not everyone who gives away mountains of free stuff will come out a winner. Free stuff is still a good way to get views, but unless your content is way ahead in terms of quality, to the point where people NEED you, people will just take the free stuff and then leave. Because, people with too many choices simply don't care.
Ultimately, the keyword is not free, it's LEVERAGE. Free can give you a measure of leverage, until everyone is using free to try to get leverage, and then free doesn't give you any leverage any more! This is already happening btw - i.e. how many million blogs are out there? Free can be an essential weapon in your arsenal, but unless your content quality (or gimmicks) are way out in front, you could give free stuff away all day and not make any sales.

Alex Nesbitt

The big lie about free is to imply that it means without cost, as opposed to without charge. The nightly broadcast news must have 8-10 minutes worth of ads. If someone places any value on time, then the nightly broadcast news is not without cost, despite the fact that I did not have to pay cash money for the show.

John Banfill

In response to A's comment "...you could give free stuff away all day and not make any sales."

You can fight it or embrace it but in the future only a handful of people will be talented or unique enough to get paid for their creative abilities. Most people are potential authors, artists or musicians. The vast majority will not have enough talent and patience to create much of an audience but tens of millions will. Most people are naturally creative, generous and love to be appreciated so the flood of free things will be overwhelming since the cost of creating, reproducing and distributing them are close to zero.

The market based/scarcity economy will still exist but it will be tiny compared to today with abundance dominating our normal lifestyle. Money itself will probably also lose its important position in many people's lives as the market economy fades. I have outlined some of the implications of this change on worldplenty.com.

Business Loans

The idea that free is of no value is so untrue. Look at organizations like SCORE who give free counseling to startup businesses. Many a small business would not get off the ground were it not for this type of free stuff. There are also many web site that give away free information of incredible value because they are looking for traffic to the site.

M Hanley

You guys are crazy!

As much as I am not a huge fan of RIAA and their tactics the examples that you have all provided are so painfully shortsighted that it hurts! For all those authors that spend a year researching writing and re-writing your books and give away chapters or offer it online for free to download - you forget a pretty fundamental fact - it takes time to read a novel and doing it online is a pain. So people buy your book so they can read it on the couch - if your book could be distilled in to a three minute audio clip and nobody then paid for it because there was no need and because you could enjoy it anywhere any time without any cost - I think you would be singing a different tune. And to those that talk about open source software and how WordPress and MySQL is free and worth so much - well it was not free to make. Sure it is worth something - because you have all this free R&D and then you can bundle your software that is not free - or hardware that is not free with it and then you make your investment back, (What business is Sun in hmmmmm ahh yes the free hardware business - nope that's not it - hmmmm). However there are many employers out there that would have really appreciated their staff to be working on billable work instead of their pet Open Source project where their company paid for their hobby.

No I think free is awesome when someone else is paying the bill and if I ever go out drinking with any of you freeloaders I will make sure the bill arrives when you have just returned from the washroom so you don't try and weasel out of it because you were merely sampling the beer for a possible future purchase.

Crosbie Fitch

The copy is not the art.

Free copies vs expensive art.

Copies are free and have marginal value only to those who don't have them and have no access to a free market in which copies are available.

The art is the thing with significant value.

So sell the art - not the copies.

Free stuff doesn't have value, but free stuff may convey something of immense value.

A free newspaper may convey valuable news. The news is valuable, the paper is not.

There is no lie here, but there is a misconception as to where the value lies.

It's amazing that people have been so brainwashed into thinking that the copy is the art, and that if the copy is free, the art has no value. Art doesn't obtain its value from the price of the copy, but by what the audience is willing to pay for the art.

Of course, if artists are selling copies instead of their art, they're not going to make nearly as much money.

The bargain is obvious, but not to those blinded by copyright.

Art for money, money for art.

hyokon

Suddenly, free seems praised everywhere. I am not against currently discussed free models, and I use some of them myself. But for artists for whom contents are all they have, giving away for free is a much more difficult decision than for a Professor at a top university. Here is my writing about this issue.

 Jazzman360

*** Evolve or Die ***

When animals cannot adapt, they fade into extinction when faced with a changing environment. When global markets open, economies (their businesses and workers) must adapt or become irrelevant (just as the US economy has shifted from a manufacturing driven economy to a services and information worker economy).

Music companies must do the same.

The issue seems less about what music companies want and what they must to 'survive.' The challenge is immense and many are unable or unwilling to make the required changes. Music companies (note I didn't call them 'record companies' or 'CD companies') must adapt with the times or await their slow fade into extinction. In their absence, there are nearly infinite avenues of distribution for upstart and established musicians alike to bring their music to market.

Farewell, I say to the music establishment. Never much liked paying $15+ for a CD to the monolithic music companies whose business model was more venture capitalistic than enlightened supporter of the arts.

Joshua Feinberg

Concepts like free, value, and innovation tend to be market-driven or at least market-influenced.

Obviously this is a very heated issue that has just as much to do with market protections and regulation as it does with consumer choice.

And the whole idea of value is always going to be both relative and truly in the eyes of the beholder.

Thanks for great FREE post.

Francis Hamit

The comment about how difficult it to read online explains why the excellent entries on Amazon Shorts (some of which are mine) do not sell better than they do. Amazon permits a buyer to download them to the home computer, e-mail them , or print them out. But Zipf's Principle of Least Effort enters in again. There are time and money constraints over and above the 49 cent cost of the title. So I am publishing "The Shenandoah Spy" myself, which will be out in print on May 9th (Belle Boyd's Birthday. That means a re-edit and some additional value added material.

There is quite a discussion on self publishing right now on the Amazon Shorts boards and the Long Tail is one of the influences. Print on Demand technology allows an author to start at the other end of the tail, publish a book and then sell it and promote it possibly to a best seller.

I spent a lot of money on a new cover design because I used to do Marketing for a living and I know that "the sizzle sells the steak". One of the ways I will recover that cost is to sell the cover image on coffee cups, t-shirts and other products at CafePress, another Print on Demand firm. This is affinity marketing which is available now.

I've come to the sad conclusion that getting a conventional publishing deal for fiction, especially literary fiction, is a real long shot. The publishers have abdicated the scouting and selection process to the agents and most agents no longer even consider fiction because it is too hard to sell. Self publishing is the future of fiction, and while most self-published novels fail, so do most of those published by the big houses. The average reader little knows or cares who the publisher is; they buy a book to read a good story. So the trick is to have your book look as professional as any other, which is not just all that hard, especially if you subcontract some of the tiresome bits, like line editing.

Amazon.com, Lulu.com, Lightning Source, and a lot of other firms are already serving this market. Here's the real edge of this Long Tail approach. You keep your rights. A big publisher can't grab half of the derivative rights simply so you can see your book in print. Not that they keep it in print very long. No one has a back list anymore except academic publishers who understand Long Tail economics and use Print on Demand firms to fill orders. DIY means that you never go out of print. Price it right and you will always make money.

And speaking of derivative rights, I won the copyright to that cover, which you can see at CafePress, where you can buy it on 25 different products like t-shirts and coffee cups. Oh, I already said that, didn't I? (sigh)Shameless self promotion is part of the Long Tail too. You can't sell it if you don't have it and you won't sell it if no one knows about it.

Francis Hamit

The comment about "monolithic record companies" shows a misunderstanding of how retail works. In the book trade, stores take as much as forty percent of the cover price as their end. The distributor gets another fifteen percent. That leaves forty five percent for the publisher, of which as much as fifteen percent goes to the author as royalties. I assume the music business has similar arrangements. Out of that thirty percent the publisher pays for printing, promotion, shelving allowances in book stores,legal fees and overhead. This is why the emphasis on best sellers. You really need economies of scale to make those numbers work. Print on Demand firms just do the printing, and always make a profit. I read some place that iUniverse has a million titles, but that the average sale is fifty copies each. Good for them, not so good for most of their authors.

butter

yups the biggest misconception of free is that no cost = free --why peole go after free poducts ?? there is a lot a stake on there --even if its artists who have their work done and making albums-- its their life and they shld be paid accordingly. nothing is free --when it is hardearned.. easy earned things go arnd for free

kabin

thanks...
Kabin
Konteyner

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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

FREE was available in all digital forms--ebook, web book, and audiobook--for free shortly after the hardcover was published on July 7th. The ebook and web book were free for a limited time and limited to certain geographic regions as determined by each national publisher; the unabridged MP3 audiobook (get zip file here) will remain free forever, available in all regions.

Order the hardcover now!