Just Because Content Is Free Doesn't Mean It's Worthless

from the let's-try-this-again dept

A few folks have asked me to comment on a recent post by Jonathan Handel, an entertainment industry lawyer, bemoaning the idea that content has become "worthless." If this sounds familiar, it's because he's merely the latest in a long line of folks to confuse price and value. That's unfortunate, too, because the piece starts off really solidly, with an extremely accurate understanding of the basic economics impacting the content industry. He notes, as we have time and time again here, the reason that price is getting driven to zero. His mistake, though, is equating price with value. He gets really close to recognizing this in his fifth point, where he notes that: "Computers, web services, and consumer electronic devices are more valuable when more content is available." In other words, that content does have value, it's just not reflected in the price (due to the infinite supply).

What's really unfortunate, though, is he then comes to exactly the wrong conclusion out of all of this. Rather than recognizing that the fact that content increases the value of so many other things opens up a ton of new business models, he goes off and makes a bunch of statements that simply aren't true about what's happening in the content industry. First, he claims that there's now less money to be made today in content creation. That's simply untrue. There's a lot more money being made in content creation than ever before -- but it's much more dispersed. It's no longer all being made by a few big content companies. Then he says (and this is almost laughable): "Another effect is that the market for professional content is becoming more concentrated and less diverse." That's simply not true at all. The number of people producing content for money is larger than at any time in history.

The problem seems to be that Handel only considers content made by big content companies as legitimate professional content. This isn't just elitist, it's wrong. What these new models have done is created legitimate ways for totally new forms of professional (and, yes, it is professional) content creation. Professional content is coming from many sources these days, and while that may be a threat to the old infrastructure -- it's not a threat to professional content, which has actually become less concentrated and significantly more diverse. Anyone who thinks there's less diverse content available these days isn't looking very hard.

Finally, he claims, oddly, that "audiences are shifting more of their spending to hit properties" which pretty much goes against everything that most of us are seeing online with "the long tail" and such things. Since Handel seems to only define media as big media and assumes that all content that is free is "worthless" it's no surprise that he'd ignore it in his calculation. But, the simple fact is that he's wrong about what's happening. Content may be becoming free, but that's opening up tremendous value (which drives more content creations) and that content is coming from a much longer tail of diverse and varied content producers. It may be troublesome for the big entertainment infrastructure he's used to dealing with, but it's hardly bad for the real content industry.


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  1.  
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    Ima Fish, Apr 15th, 2008 @ 1:11pm

    "Handel... assumes that all content that is free is 'worthless'"

    Well, broadcast television content is both free and worthless. So maybe he's on to something.

     

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    Oliver Wendell Jones, Apr 15th, 2008 @ 1:13pm

    Free and Worthless are not the same

    The air that we breathe is "free" but I guarantee that once you put a plastic bag over someone's head, they no longer think that air is "worthless".

    The problem that so many people have is that for years the entire world has had "plastic bags" over their heads and the media companies chose to let us have little bits of "air" for which we paid.

    Now, with the advent of the internet and the ability for anyone to put anything they create online for the entire world to see, we've had our "plastic bags" ripped off and suddenly there is an entire atmosphere of free "air" to breathe and the big media companies are finding it harder and harder to convince us to pay a premium for their "air" and they're trying to find ways (such as DRM extended copyright limitations and other increased legislation) to pull those "plastic bags" back over our heads.

     

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    Rose M. Welch, Apr 15th, 2008 @ 1:55pm

    Laughable.

    This year, this horrible economic year for our country, I opened a web site design business that's doing fairly well. I cater to small - medium local business, and we spend alot of time face to face.

    I create content for them. I help them decide what colors and graphics to use, I photograph products and stores and owners, I help write ad copy for the site (Cause c'mon, pharmacists, child care providers, and accountants don't generally know what the hell to say, rofl.) and anything else they need.

    Every single of one my clients, some of whom had a shoddy web presence and some who had none, have seen a rise in customers coming in who were directed there from thier web site. From a simple, yeah, I didn't know when you were open to flat-out, yeah, we didn't know your business existed. Every single one.

    These are the guys who fruitlessly purchased small amounts of expensive tv and radio time and got small results. So I'd say that my clients are very happy with their content, and think that it is worth money to them, even though it is free to thier clients/customers.

    But the big companies who sell the same templates over and over again for hudnreds of dollars may not be.

     

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    JLE, Apr 15th, 2008 @ 2:00pm

    Cuts both ways

    I'm of the belief that the majority of "professional" content is flat out stolen. "Stolen" and "free" are not quite the same either.

     

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    Jake, Apr 15th, 2008 @ 2:01pm

    I know of at least three webcomic artists whose entire site archive is free, yet make enough money from selling print editions, t-shirts etc that they actually make a full-time living out of it. Does that sound worthless to you?
    (And I'm not going to specify which webcomics here because that would send everyone off on a tangent.)

     

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  6.  
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    MDH, Apr 15th, 2008 @ 2:16pm

    The artists are beginning to understand

    The only way the entertainment ecosystem is ever going to acknowledge all of this is for them to witness artists realize benefits from the new model(s).

    I was thrilled to see the band Rush (my favorite band evar) talk this week about how the internet and ability to download for free - has been a POSITIVE thing for their band, as they're experiencing better concert results than they ever have in their 30+ years.

    I do think they also outline some challenges.

    Here's a video of a press conference they did earlier this week (kicking off a 2nd leg of their tour) - they address this whole question. http://tinyurl.com/6qp6p8

    Screw lawyers who need to pontificate about it - they have no real skin in the game. Listen to the people who it REALLY affects every day, and as we see more and more stories develop like Rush... everybody will start nodding their heads that "free" is OK.

     

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    Anonymous Coward, Apr 15th, 2008 @ 2:42pm

    Re: Laughable.

    Do you create this content for free? If not, I'm not sure how your comment applies to this article and subsequent discussion!

     

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    Aaron deOliveira (profile), Apr 15th, 2008 @ 3:24pm

    Re:

    Jake's right. two benifits that free content producers can profit from is that their content eventually becomes unweildly as a whole. if you have 500+ comic strips it becomes difficult to consume. there is now value in reducing a piece of it to print format.

    Another way they make money is offering extended story lines in print only formats. Order of the Stick is a good example of this.

     

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    Rose M. Welch, Apr 15th, 2008 @ 6:40pm

    You totally missed the point, 7.

    I don't provide the content for free. My clients provide thier content for free to thier customer base. It costs the customer base nothing, but the customers find it very useful and worthwhile, esp. the informational blogs. See the point? It is worth thier while. They spend time on those sites, and then spend money with the owners of the sites, making the site profitable.

    Meanwhile, other sites pick up thier blogs, and thier message goes further, which costs them nothing. So, the service site gets some ad support, the customer base gets the information for free, and the originator of the information gets more customers.

    The content they offer is free of charge. This means that they don't charge for it even though thier customers think it's valuable and it generates funds in a seven-degrees of Kevin bacon way. Got it now?

     

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    Iron Chef, Apr 16th, 2008 @ 2:29am

    Perception of "value" versus "cost"

    There's a terrible misunderstanding of "value" these days. A asset such as content, or even a car's value can fluxuate due to economic realities and even intrinsic reasons.

    Value is not the same as price or cost. To create value, you need to be able to increase something to the customer in some way, shape or form.

    Unfortunately, it seems that many content providers have associated "value" to cost to produce, cost to maintain... Seemingly inward-focused metrics, instead of looking at value from an outside-in, consumer perspective.

    One example, is the value of entertainment, Instead of looking at a customer's perspective-- the fact that a healthy percentage of expendable income is often allocated to entertainment, the focus became what can we make cheap and sell at a profit.

    Surely you see that I am oversimplifying. But the fact remains, that by being customer focused, the customer can be led to perceive value as sometimes a more precious commodity than another piece of content or type of entertainment.

    Consider the value-based model of Apple. I was shocked when I read today that Apple is now valued higher than Citigroup. (Wow!) But creating value has to begin with the end customer and flow through the organization something like a culture.

    An interesting way to approach it is to constantly ask who is the customer? Are you selling them a movie/dvd/tv program and showing them you can hire the best graphic artists and producers? Or are you encouraging and promoting an artist's ability to tell a story?

     

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    Errant Garnish (profile), Apr 16th, 2008 @ 5:04am

    Content is "worth less" . . .

    ... but not "worthless." (Please note the single space in the subject) I agree wholeheartedly with Mike's post about ValuePrice. It's a familiar argument and anyone who stayed awake in Economics 101 should have the capacity to grasp the concept. Furthermore, it is plain to see that media business models are changing as a result of this shift in the economics of distributing content.

    I do think Handel has a point about the devaluation of "content" as a generic description for the words, sounds, and pictures that people consume via the media. To categorically (and perhaps unfairly) pick on User-Generated Content, for a moment: there are so many voices which are now being amplified by Internet blogs (like my own, for instance!) that would never have had seen the light of day in the pre-Internet media.

    Yes, this is good, because it gives people (like me) with the occasional flash of brilliance to share it with the world. But it also devalues the work of profoundly talented creative work. The "signal to noise ratio" has declined. More quantity, less quality, anyone? It is as if an art museum invited the public to hang their own paintings in the empty spaces on the wall. The museum visitor would get to see a much more diverse array of work, but the greatest works would be crowded out and get less attention.

    Don't get me wrong, I support the democratization of content and wouldn't change a thing. But with the arrival of a new "golden age" of interconnectedness, an old "golden age" of nobility in the creative community falls by the wayside. While we cheer the new arrival, it is appropriate to take a moment to mourn what is dying. In my humble opinion, that is all Handel is suggesting.

     

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  12.  
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    Jake, Apr 16th, 2008 @ 3:09pm

    Re:

    I was actually thinking more of what Tim Buckley's doing with Ctrl+Alt+Del, Aaron; not only is he selling a spin-off series retail (and boy oh boy what wouldn't I give to get my hands on a copy!), but there's now an animated series available on DVD.

     

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