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
    bigpicture, 9 May 2009 @ 11:31am

    Re: He's right

    In viewing the various business models involved here. At this point Google only sees itself as a "content provider" or deliverer. It has not moved very far into other areas that do not support this core business. In fact MS made some comments about a "one trick pony" but what a successful trick?

    The newspapers see themselves as both (1) "content creators" and (2) "content providers". In (2) it is obvious that they cannot compete with Google, probably could not compete in (1) either if Google was in that business. Why because the content that they create is crap, watered down, catered to special interests, edited to hell crap that has very little truth that may be contentious.

    And they wonder why their business is in the toilet? They forget that all revenue (apart from government forced revenue) comes from the customer. So what I have not seen discussed here are the two essential questions to any business (1) Who is the customer?, and (2) What do they want? So maybe the newspapers need to take a long hard look at the "who is the customer?" question. And the "what do they want?" question instead of assuming that they want placebos. The Google advertising model not only provides feedback to the participating businesses about the quality and value of their adds, (who they are reaching) but also indirectly what the customer wants, or doesn't want. Because you cannot sell what the customer does not want, you cannot even give it away for free.

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