[Tim Lee]
When I'm not guest-blogging for Megan, I'm a regular contributor to Techdirt, a blog that focuses on the technology industry. The site's owner, Mike Masnick, has gotten a lot of attention for a post he did on Friday about making money by giving stuff away. It's a response to New York Times columnist David Pogue, who attacked the "Slashdot argument" that "books, music, films, software and so on ought to be freely distributed to anyone who wants them, simply because they can be freely distributed." Pogue helpfully explains that simply giving away copyrighted material free of charge doesn't magically make one rich.
Now, as Mike points out, this is a bit of a straw man. Nobody is arguing that simply giving one's creative works away for free will magically allow one to make a living. Rather, the argument is that giving away information goods (which have zero marginal cost) can expand the market for other goods that can then be sold at a profit. The most obvious example is advertising—lots of sites give away content or applications in order to sell ads. But this isn't the only example by a long shot. Musicians can give away their music to sell more concert tickets. Free software companies like Red Hat, IBM, and MySQL give away software in order to increase demand for their support contracts. In addition to advertisers, successful bloggers give away their blog posts in order to build up their traffic and get speaking fees and book advances.
Most of these business models have become newly viable as the Internet has pushed the cost of transmitting information close to zero. Fifty years ago, you needed expensive equipment to produce information goods like newspapers, television broadcasts, or music albums. And it was therefore necessary to charge for the finished product in order to recoup those costs. Not surprisingly, the businesses that have grown up around those 20th century distribution technologies are not too enthusiastic about business models that involve giving away for free product that used to fetch them a nice fat profit margin.
This kind of discussion invariably turns to "piracy," and especially peer-to-peer file sharing. It is commonly suggested that the real problem is that kids these days don't have enough respect for copyright law, and that all that's needed is to better educate them about the importance of respecting copyright. Now, I have some sympathy for this point of view. I don't participate in illicit file sharing and I don't have much sympathy for folks who do so and get caught. Nevertheless, I think this line of argument misses the point rather badly. Because although the short-term problem facing many content industries may be illegal sharing of their copyrighted materials, the long-term threat is that their prices will be undercut by competitors who share their own intellectual creations free of charge. This has already happened in the news and punditry world, as thousands of bloggers and news sites provide for free the news that newspapers charged for a couple of decades ago. And it's beginning to happen in the music industry. The fundamental challenge facing the incumbent content industries is not "piracy" but dramatically increased competition.
What makes this difficult is that it requires some creativity to figure out which business models will be successful. As Mike points out, "give it away and pray" isn't a viable business model. Figuring out what to give away and how to monetize the resulting attention is a difficult problem that everyone, from Facebook to the Atlantic is struggling to solve. But plenty of businesses have succeeded, with Google as the most important poster child. But businesses that specialize in information—news, music, movies, software—have no choice but to take it seriously, because if they don't their competitors surely will.
Photo courtesy of Jeremy Engleman
As a blanket rule, giving away anything for free is a dubious proposition, propped up by the idea that advertising fees will make up the difference.
In addition to advertisers, successful bloggers give away their blog posts in order to build up their traffic and get speaking fees and book advances.
To the above I would imagine that there are at minimum a million bloggers out there giving it all away, and the number who manage to walk away with book advances or speaking fees could be counted at maybe... 100-300. If that.
When giving free, it forces you to do double duty, in that you no longer can monetize the core product. It's no longer "Here is my creation, pay me for it" but rather, "Here is my creation, and now let me spend several more bits of energy figuring out how to make a buck off of this with a related product or effort". It's actually more difficult.
So in fact, if you are in information, your business does not in fact remain "information". It becomes whatever else you are doing to make a buck. Google, for example, thrives as a business because they have a set of technology that cannot in fact be replicated so easily. And if you duplicated their exact methods, they would sue your ass off.
In fact, Google is not at all an example of giving away anything free and making a buck. The free stuff it gives is the bait that makes it's core business--advertising--profitable. People just read it backwards and say, "Ooh, Google is giving away free wordprocessing... see free is good". But they know where their bread is buttered and you will never get your hands on their algorithms. That won't be free.
The danger is that while these business models are being worked out, we'll enshrine injustices like the one which came about during the advent of radio in the US: unlike elsewhere in the world, we chose not to pay royalties to the owner of the sound recording (only to the owner of the tune). Once that was set, it became impossible to change.
That was a massive giveaway from individual authors to corporate broadcasters. And if people like Tim Lee have their way, it will be the telecoms who benefit from the next round.
It's strange to see that in most discussions of copyright, it's assumed that the only way to "monetize" creative works is to prevent them from slipping into the public domain.
If Mickey Mouse ever went into PD, it would not signal the end of making money from Mickey. People would still buy watches and sippy cups with Mickey's likeness. The difference is that a whole range of entities would be able to profit from it without seeking permission or a license from Disney Corp.
The current copyright scheme doesn't seem to have much to do with incentivizing the creative class so much as ensuring that all rights and rewards are narrowly funneled to the rights holder.
One wonders how the Bible would have been compiled had it been done in the current copyright regime. Would Mark have sued Luke and Matthew for writing derivative works? And all the scribes who copied and edited the gospels over the centuries? Would they be guilty of infringement?
One could argue that with an IP policy that focuses almost exclusively on creating legal monopolies, Western Civilization would not have advanced as far as it has.
People would still buy watches and sippy cups with Mickey's likeness. The difference is that a whole range of entities would be able to profit from it without seeking permission or a license from Disney Corp.
The problem with such "weak IP" fetishism is that when today's talented cartoonist pens an icon like Mickey in a stroke of inspiration, corporate behemoths like Disney/ABC will be in a vastly superior position to monetize the new creation because they have so many institutional advantages over individuals -- particularly control over the distribution channel. In the name of bringing down Disney, you are strengthening them.
Frankly, I don't care how much money Disney makes.
The copyright to Shakespeares plays belonged to the theatre, not to him - and yet they still got written.