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. identicon
    John Wolpert, 9 May 2009 @ 11:13am

    Examples

    It is absolutely correct that business models are much more than just "here's a product, now sell it." It is the entire, intricate pattern of the value web (as..as you say..any first year marketing major will tell you). And I think you are suggesting (rightly) that business models can be multi-turn games. In fact, the old ad-driven model is just this. Give away the content for free and piggy-back ads. Today, we see far more complexity in how business models can play. But what I found lacking in this and other stories TechCrunch and other folks on this side of the debate was specific examples. Some examples: 1) A blogger that becomes known for expertise on a specific topic gets a call from a think-tank director to become a paid contributor. 2) George Lucas - need I say more? - practically gives away his rights to the content in Star Wars ep IV, but makes his money on global marketing rights to action figures, etc. Sure, there are still rights involved here, but it is a good example of second-order profit-taking rather than trying to make all your money on the core "product." 3) A fiction writer "gives away" his book to be read online using Scribd.com but about 10% of online free readers (with a little social encouragement around the margins of the page saying, "it took me a long time to write this, so please consider buying my printed book 'souvenir'") go to his amazon page and buy the print book to put on their coffee table...or at least buy the Kindle version. And these don't even crack the surface of the novel business models we will be seeing. Sure, it was nice to be able to just produce some content and sell it in the past. But like it or not, we now must be creative both with the content and in how that content interacts over successive rounds of the game of gives-and-gets.

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