Free Does Not Mean No Business Model

from the repeat-after-me... dept

As we get ready for The Free Summit, I was thinking about some of the recent posts here on Techdirt, and realizing a really common fallacy that seems to destroy all debates around "free." It's the implicit assumption that "free" means no business model. We saw it with law professor Justin Hughes' defense of copyright in The Economist debate over copyright, where he states:
What we have now is a mixed economy for expression in which some expression is produced under a patronage model (foundation grants, universities), some expression is produced under the open source model (Linux, blogs), and some expression is produced under a profit/incentive model of copyright.
And we see it when David Simon goes to Congress and says:
It costs money to do the finest kind of journalism. And how anyone can believe that the industry can fund that kind of expense by giving its product away online to aggregators and bloggers is a source of endless fascination to me. A freshman marketing major at any community college can tell you that if you don't have a product for which you can charge people, you don't actually have a product.
Both of those statements are based on the implicit assumption that "free" means "non-profit" or "not a business." Yet, nothing is further from the truth. Free has always been a part of many business models, and when most supporters of "free" are talking about isn't that content creation and journalism go to an "all amateur/all non-profit" model. No one is saying that at all. We're saying that they need to learn to embrace other business models rather than rely on copyright as a kind of crutch.

When you've been relying on that crutch for so long, you forget that you have two legs of your own and can make do without the crutch. We're seeing it all the time, with content based business models that don't rely on copyright which have been shown to be more successful than the old copyright crutch business models. There are lots of ways to make money that involve "free" as a part of the business model.

So, from now on, whenever you see someone arguing against free, and implicitly assuming that "free" means there is no business model, correct them. Let them know that they're arguing against a total strawman. No one says the professional class of content creators or journalists is about to go away. We're saying that they'll earn their money in a different way, and it won't rely on charging directly for their content, but on other goods that their content makes much more valuable.

Filed Under: business models, free


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  1. icon
    Mike (profile), 11 May 2009 @ 11:41pm

    Re: Free! Summet

    I was disappointed at the Free! Music Summit today - at the music panel when there was not ONE mention of Creative Commons or Jamendo Music - the world's leading partners in free and legal music business models on the Internet. Wasn't the panel title, "Music: Business Models That Work". The only thing mentioned that worked was a post-punk 80's band that sold 3x more t-shirts than they did three weeks earlier because they didn't post the $15 price. Woop. woop!??? Mike - let's get coffee and talk about Music and Free and Business!

    Hi Dan. I'm sorry that you felt we didn't properly mention your company -- but it's not true that the only example was an 80's band. Actually, we discussed many different bands, involving many different models (none of which were 80s bands...). I think you were confused first by the fact that Dave plays in Gang of Four with the fact that he's working with many different bands, and the examples he gave were of those bands.

    Also, I discussed some of the other models that have worked, and named a variety of companies, including BandMetrics, ReverbNation and others.

    There really was only so much time in the discussion, and yes, it would have bee great if we had the time to delve further into other companies, but the feedback we got was that people wanted a discussion on the more general issues around music, not the names of specific companies.

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