deflation
In part one of this two part column, we looked at the controversial book Free: The Future of A Radical Price http://www.amazon.com/Free-Future-Radical-Chris-Anderson/dp/1401322905 by Chris Anderson http://www.thelongtail.com.  Anderson’s thesis is that as certain industries become digital and migrate to the net, some, if not all, of their products tend toward a price of zero. This is in part because the web is the world’s largest and most sophisticated copy machine. Reproducing information like movies, songs, and columns about the internet is what it does superlatively well. Before the net, there were two costs to making money from such information: the cost of creating it and the cost of producing and disseminating it. Now, thanks to our shiny digital distribution network, the marginal costs of production and dissemination seem to have shrunk to practically nothing. 

Anderson argues that the downward pressure on price is unstoppable. “Free is just a matter of when, not if,” he writes. But he believes that it is still possible to make money from free products, by redefining the markets, and he offers an extensive list of ways it is being accomplished at this very moment.  “When one product or service becomes free, value migrates to the next higher layer,” he claims. “Go there.”

But it is not only the marginal costs which have undergone radical deflation.  As we discussed last time, people are volunteering their labor to create information on the net as well. They do this for many reasons, but chief among them is, I think, the thrill of being creative and useful and of sharing their enthusiasms with the world.  Much of the free content on the web has been created by amateurs. Understand that they are often as gifted and insightful as professionals. Nevertheless, in the sense that they are not paid, they are amateurs.

reaction
Critics, and there have been many, have chided Anderson for his sunny take on the disruption caused by the radical deflation served up by the net. “Free is a successful business speech between two covers, pleasant, upbeat and full of anecdotes and bullet points,” says the New York Times http://www.nytimes.com/2009/07/12/books/review/Postrel-t.html?_r=1&pagewanted=all But Anderson does not follow his ideas to their logical conclusion. “After all, the last thing a business author wants to suggest is that we’re entering a new age of amateurism. But there are hints throughout the book that the future of this radical price is to be found in the past, when satisfying work was what one did on the income provided by less satisfying toil, or by investments, patronage, or marriage.”

Malcolm Gladwell http://www.gladwell.com author of The Tipping Point and Outliers rips into Anderson’s premises in a review in The New Yorkerhttp://www.newyorker.com/arts/critics/books/2009/07/06/090706crbo_books_gladwell.  Anderson points to YouTube http://www.youtube.com as a example how giving content away can be successful. Gladwell calls him out on this claim: the stupendous popularity of YouTube has meant that its bandwidth costs are also, well, stupendous. According to one estimate, YouTube will lose half a billion dollars in 2009. In a memorable line, Gladwell derides YouTube’s alleged success, “If it were a bank, it would be eligible for TARP funds.”
Cory Doctorow http://www.craphound.com reviewing in The Guardian http://www.guardian.co.uk/technology/blog/2009/jul/28/cory-doctorow-free-chris-anderson is more sympathetic than some but argues that observing the rise of free culture through the lens of markets distorts Anderson’s view. “There’s a pretty strong case to be made that ‘free’ has some inherent antipathy to capitalism. That is, information that can be freely reproduced at no marginal cost may not want, need, or benefit from markets as a way of organizing them.” The content created by the legions of netizens who volunteer their labor is not free in the sense that Anderson intends. “The material,” Doctorow writes, “is, instead, literally priceless. It represents a large and increasing segment of our public life that is conducted entirely for reasons outside the marketplace.”

While many of the critics of Anderson’s theses are spot on, it would be foolish to ignore this book. When he asserts that free is here to stay, I believe him.  Those who object to the deflation of prices for content on the web, those who hope we can hold onto fifteen dollar CDs and thirty dollar hardcover books and newspapers you can line birdcages with, just don’t get it. The biggest problem with Free, it seems to me, is its subtitle: The Future of a Radical Price. The book is not the map to the future that we all covet. Rather, it is a blurry snapshot of the current digital landscape. Net culture and technology are demonetizing entire industries, that’s clear. The question is, how will we re-monetize their successor industries? While he offers suggestions, Anderson doesn’t really have the answers.
Because nobody does.

reputation
What is it worth to pop to the top of a Google search?  How about to appear on the first page? The first three pages?  If you were to opine that page rank is worthless in real dollars, then how do you account for all the search engine optimization services out there that will charge you $50, $80, or even $120 a month to boost it?  Why did creativity software giant Adobe Systems http://www.adobe.com buy the web analytics company Omniture http://www.omniture.com last September for $1.8 billion?

An important tool in Anderson’s strategy for surviving in the net’s zero price economy is converting credit in the attention and reputation economies into dollars.  While there is a heated debate about the nature of these economies, there are some rough tools for assessing a website’s status in them.  Alas, the art of web analytics http://www.en.wikipedia.org/wiki/Web_analytics is largely beyond me. It is no doubt too simple to say that the attention a site receives can be measured by how many people visit it and how long they stay, while the reputation of a site can be measured by how many other sites link to it. But these definitions are tempting, since they’re easy to quantify. Those who track markets love numbers, even if they are misleading.  And if you can convince an advertiser that your numbers mean that enough of her customers will read her message on your site, then you may be able to charge her for an ad.

But the reputation economy can also pay off indirectly.  Give away an abundance of content, attract an audience and build your “brand.” (My inner English major shudders whenever I use this word.  Did Franz Kafka http://www.kafka.org/ build his brand? Does Thomas Pynchon http://www.thomaspynchon.com ego surf http://www.addictomatic.com  ?) Once you have established your rep, you can storm out into the world and sell yourself as an added value. We’ve all heard Stewart Brand’s http://www.web.me.com/stewartbrand famous saying “Information wants to be free.” But did you know that it was part of a longer quote http://www.web.me.com/stewartbrand/SB_homepage/Info_free_story.html ?
“On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

The ninth of Anderson’s Ten Rules of Free is “Free Makes Other Things More Valuable.”  If you have given away an abundance of content and through that exposure have established a reputation, one kind of expensive information you have to offer is that which you can only impart in person. Thus the apostles of Free preach that rock bands can give their music away on the net and earn their livings at concerts.
Well, maybe. But exactly how is this supposed to work for symphony orchestras? And how many midlist science fiction writers are besieged by lucrative offers to read their work in football stadiums or to give lecture series on the speculative short story at Harvard? We freelancers have a saying that goes to this point “You can die of exposure.”
By the way, if you’d like to invite a science fiction writer to stop by your neighborhood and say interesting stuff, check out SFWA’s Speakers Bureau http://www.sfwa.org/for-educators/speakers-bureau.

exit
Warning! I’m going to finish by talking about myself, as I do all too often, so feel free to skip ahead now to all the great stories in this issue.
I have to admit that I have benefited from the reputation economy. Although I do not myself have a Master of Fine Arts, I earn a paycheck teaching at the Stonecoast Creative Writing MFA Program http://www.usm.maine.edu/stonecoastmfa. I am pretty sure that I wasn’t hired because I was giving content away on the net, but rather because of the scores of stories I have written, the majority of which have appeared in Asimov’s.

However, I do write this column and it does appear for free on the ‘Mov’s site. Why do I do it?  As I said in the last installment, human behavior is over-determined, and my various reasons illustrate the rewards that are possible in the zero price economy. I did get paid for typing these words, although not handsomely so. The fact is, I could make more money doing other kinds of writing. So the financial incentive is secondary, at best. More important is that by writing this column I am earning credit in the reputation economy. When I attend science fiction conventions I am surprised (and a little chagrinned) that, of those who recognize my name, a sizeable fraction have only the vaguest idea that I write stories. They know me primarily for this column. But have I been able to bank that credit? Not so far. Most important of all, though, is that I get a kick out of being your net columnist. This gig gives me a perfectly good excuse for wasting time exploring sites that interest me. It has helped me become a better writer. And I feel like I am doing good when I point out really deserving sites.

Sure, getting paid and earning a rep count. But as those Master Card http://www.mastercard.com ads say,
Having fun while I write: priceless.