Case Study: How TED Learned That 'Giving It Away' Increased Both Popularity And Revenue
from the cwf+rtb dept
LaRae Meadows was kind enough to send over her analysis of how the famed TED conference not only embraced the whole CwF+RtB concept, but also learned that giving away the infinite goods can massively increase the value of scarce goods. It’s actually a really great case study example. One of the complaints that we sometimes hear in response to arguments about giving away the infinite goods in order to increase the value of scarce goods, is the claim that content creators can already sell lots of scarce goods, so why should they also set the infinite goods free.
What they don’t realize, is that, when done properly, setting those infinite goods free helps increase both the popularity and value of the scarce goods. A simple version of this is that a band who isn’t that well known in a certain region, is unlikely to be able to book a larger venue, or charge very much for tickets (a scarce good). However, if that band is much more well known (and liked, of course!) then they can book larger venues and charge higher rates (within reason, of course).
And that’s exactly what TED figured out.
The amazingly exclusive conference used to be excessively secretive as well. Attendees, who paid thousands for the privilege (and who could only attend if they were “invited”), had to sign non-disclosure agreements, and no one was supposed to publicly discuss or show what the TED speakers talked about. If you think about this from a classical “scarcities-only” economics viewpoint, you can see why people would think this was smart. After all, that content is valuable, so the natural desire is to hoard it, with the classical thinking being that by hoarding it and putting up an artificial scarcity around the content, you make it more valuable.
But what TED has learned is that it appears the opposite is true. Once current TED curator Chris Anderson (not the Wired/Long Tail Chris Anderson) took over, and changed the system, part of the change was making every TED talk available for free online. And, of course, these days, the public TED talks site has become a hugely popular destination site.
Now, again, under the classical theory, this should have harmed the value of TED itself. After all, if you can see all the talks for free, why pay thousands of dollars to go in person. But, if you add back in the economics of abundance and infinite goods, you realize that doesn’t make any sense. The infinte goods (the content) can be widely distributed and shared for free, acting as a massive promotion for the scarce (the seats) and thereby increasing their value. And that’s exactly what’s happened:
Since the videos were released for free and shared with the world, the cost of a seat at TED Conference has gone up from $4,400 to $6,000 per seat. They found a wider audience by expanding the focus. TED moved from their home in Monterey, CA to Long Beach, CA to accommodate more attendees. TED spawned a sister conference, TEDGlobal which is held in a different country each year. TEDActive 2012 meets at the same time as the TED Conference and costs $3,750 to watch a live simulcast of the TED Conference, after which attendees are encouraged to discuss the talks. They also encouraged TEDx conferences were TED fans hold mini-TED conferences they host themselves. All this while increasing the quality of the production of their talks, sticking true to their goals, keeping their exceptional level of speakers, developing a loyal following, and becoming an award-winning Internet powerhouse.
By “giving away” the infinite for free, and helping to spread it and syndicate it as far and as wide as possible, TED was able to massively boost its brand awareness and interest, and increase the value of the seats. And that’s increased in almost every way. They moved the conference to handle more people and increased the price and introduced a (only slightly) cheaper “simulcast” conference and added additional events. And an awful lot of that is due to the publicity generated from the free TED talks. In the past, TED was well known only in very specific circles. But by opening up and freeing the infinite goods, it’s become massively well-known throughout the world… and it’s also made the event itself able to earn a lot more money (which it then uses to further the core mission of disseminating ‘ideas worth spreading.’)