We've all heard it before: [industry X] can't compete in the marketplace because the public just wants everything for free. It's a mantra taken up by the film industry, the recording industry, the literary industry, and the video game industry. And, almost always, we've found that the mantra is complete nonsense. Instead, it's been clear that the public is more than willing to purchase that which is scarce and valued. It's just that those scarce and valued things are often times not the content itself.
The retro-gaming industry is instructive in this for two reasons. Piracy is typically much easier for retro games than modern titles. Most of the older consoles have been fully emulated at this point, with ROMs and games readily available for them online. For older PC titles, retro games often have no DRM or have been cracked so long ago that the cracked files are also readily available. In addition, retro titles aren't policed the same way that modern releases are. And, yet, despite all of that, or perhaps because of it, the retro-gaming industry is exploding.
Sites like GOG.com and Steam's client offer old games with smaller pricetags. The major console-makers like Nintendo, Sony, and Microsoft all have their own marketplaces for digital downloads of retro games. Those marketplaces must be doing quite well, considering that the consoles and publishers continue to support them and expand the retro-game catalogs. And, for the actual old products, the interest and prices for retro-game pieces are skyrocketing.
Giulio Graziani says it makes him feel a bit like a drug dealer, even though he's not buying anything illegal. It's part of his job digging up a steady supply of video games from the 1980s and 1990s for his store, VideoGamesNewYork, which specializes in everything from Atari and Gameboy to rare prototype NES cartridges.
Graziani, 50, has been in business since 2003, but says the market only recently began to spike. "Five years ago, I could drive through Texas and stop in little towns and buy everything," he says. "Now they're selling games out there for more than I do!" Even simple pieces, like The Legend of Zelda Ocarina of Time, which cost $12 in 2010, now go for $25. More coveted games, like Nintendo's Earthbound, can fetch hundreds of dollars, even thousands if they're in the original box.
It's always been this way. Collectors of art will always pay for original pieces, or for the items that go along with the actual content. If the public simply wanted everything for free when it came to gaming, anyone could go on the internet and get an emulator and a copy of The Legend of Zelda and have at it. But, of course, there are scarce items that go along with the collectables that can't be downloaded, and so the prices are paid, even as they rise. And it's not peanuts we're talking about here. Estimates for how big the retro-gaming market is come in at something like $200 million per year.
For those who aren't collectors, however, there's still a reason to buy.
Luckily, for a casual retro gamer, there are some cheap solutions to get a quick dose of nostalgia. Nintendo's Virtual Console allows you to download classic titles to play on the Wii U or Nintendo 3DS. The Retron 5 console by Hyperkin sells for $159.99 and supports games for 10 systems, including NES, SNES, Famicom, SENES, Genesis and Game Boy.
Add to that GOG and Steam, along with the old-game marketplace Sony and Microsoft offer, and the RtB here should be clear: ease of purchase and the platform. Much like it is understood that iTunes is attractive because of the platform, rather than the music catalog that is also available via piracy, so do gamers appreciate the convenience offered by these marketplaces. Which is why they're growing and selling more and more.
If anything should signal the end of the "everyone wants everything for free" myth, let it be retro-gaming.
South Park creators Trey Parker and Matt Stone have built an entire comedy empire on the back of free distribution. The pair first came to fame by circulating their animated short, The Spirit of Christmas, for free first as a popular bootleg VHS and later on the Internet. They also were among the first TV show creators to operate their own web portal to provide content for free, striking a (at the time) groundbreaking 50/50 ad revenue sharing deal with Viacom. They were the grandfathers of viral content, with free distribution leading them to the mammoth financial and critical success South Park saw at its peak, and continues to enjoy today.
So with the news that Parker and Stone have struck a new, $192 million exclusive, walled off South Park streaming deal with Hulu, it's a little odd to see Stone suddenly forget what made much of his rise to success possible. In an interview discussing the huge Hulu deal, Stone laments how amorphous, villainous "tech guys" demanded he make his content available online, for free:
"This is now particularly satisfying," said Stone in a recent discussion. "It comes full circle since the tech guys came to Hollywood and said you better give us your stuff for free to put online or else it will be taken from you anyway."
The argument that "tech guys" just want everything to be free is a fairly normal response by those who don't understand the digital economy, and are informed that you can reduce piracy by incorporating free into your business model. But again, this is a particularly weird comment coming from Stone, whose entire career foundation was built on such models (apparently begrudgingly). That freemium models help reduce piracy is something Stone appeared to understand perfectly well when talking to Boing Boing back in 2008:
"Basically, we just got really sick of having to download our own show illegally all the time. So we gave ourselves a legal alternative."
"NY Times: You’re now about two years into the operation of your South Park Studios Web site, where just about all the content is available for free. Does the gamble seem to be paying off?
PARKER: To be honest, we don’t care about the money. We both have all the money we need. It’s really just about the survival of the show. First hearing about, O.K., we’re going to be putting everything on the Internet for free, I was like, Really? Wow, O.K. [laughs] That’s the world we live in. I’m actually surprised at how smooth the transition is going.
STONE: If we had years and years to discuss it, and we had determined what the right course of action was – but we don’t have years and years. We’re doing the show right now in 2010, and the reality is, we have to have our show on the Internet. Would the network like it if everyone who watched it for free on the Internet actually had to pay? Yes. But it always ends up helping us when people can see the show.
Yet here we are, the better part of a decade later, with Stone clearly annoyed by what he insists is Silicon Valley's demand that he not get paid for his hard work:
"Frankly, in the past I haven't much liked dealing with the people from Silicon Valley. I don’t like our stuff being talked about as content. Spoons are metal and guns are metal, but they're not the same thing. We don’t make content. We make television. And that's now what digital understands it has to pay for."
Arguing that "content" is a reductive word is understandable, but this narrative that ambiguous "digital" enemies in Silicon Valley don't want to pay for television programming is odd, since "digital" has been paying an arm and a leg for content since inception. Netflix, for example, is expected to spend as much as $5 billion in 2016 on programming, making the streaming operator the second largest content buyer behind ESPN. Does that strike you as a "digital" industry that doesn't think there's a price tag for quality television? Perhaps Stone is just developing a nasty case of "get the hell off my lawn" and no longer has the best memory, perched as he is upon precariously-leaning towers of money.
Streaming companies, broadcasters, and content creators alike also don't appear to understand the potential pitfalls these exclusive streaming arrangements create. While 2015 has been a banner year for the evolution of internet video by any standard, there's been a troubling rise in not only exclusive content deals (Hulu, owned by Comcast/NBC, also shelled out $160 million for exclusive streaming rights to Seinfeld), but also standalone streaming services from every broadcaster under the sun (even those B-grade schlock masters over at Lifetime), each of which is going to be eager to lock their own content down exclusively to keep it out of the hands of more successful third-party operators.
While streaming operators might correctly believe that having exclusive access to select programming can lure customers in the short run, fracturing the content availability landscape in such a fashion could have some nasty downsides. Making consumers hunt and peck their way through an endless variety of $7 to $40 streaming packages for what they want might easily drive annoyed consumers back to piracy (something we've been saying for years). Streaming operators also risk driving those users back to cable if the industry ever wakes up and decides to offer a more uniform value proposition. Right now that's not a risk, since cable execs are still obliviously raising rates in the face of increased competition; but it will be.
Internet video was supposed to be something different and better, built on the legacy dinosaur bones of an industry obsessed with turf protection and utterly terrified of disruption. There were notable lessons learned during internet video's rise during this period; hopefully they're not all mysteriously and suddenly forgotten just as internet video starts reaching its true potential and the money truly begins to flow.
When it comes to old notions that are used to stave off the need to embrace new business models in the digital age, nothing is more annoying than the whole "the masses just want everything for free" myth. That belief is snappy, punchy, and as simple to understand as it is completely and demonstrably wrong. But for a certain segment of the population, typically older generations of the kind that pine for the good old days when America was all apple pie and tasteful cartoons, the myth persists. Now, however, the myth is old. Old enough that it's begun to lose its flavor, like a piece of gum that you've been chewing on since Metallica shut down Napster. The new flavor is every digital success story that proves the myth wrong. Kickstarter happens to be my favorite example of this. What's remarkable about Kickstarter is that it's over half a decade old and, despite some still embracing the old myths, it's somehow stillsetting records in raising money for content producers.
Shenmue 3 isn’t only the fastest game to raise a million dollars on Kickstarter, it’s also the fastest game to raise two million dollars. The project was announced last night at Sony’s E3 press conference. It’s the follow-up the Shenmue 2, which was released fourteen years ago.
Were you to believe the legacy content producers, who insist the public are free-loading internet anarchists hell-bent on ruining everything and everyone, this shouldn't even be possible. The fact that records for raising money are being broken now is perfect in debunking every part of the myth. The money rolls in over a decade after the myth's creation, despite the expectation that every day would see an increase in younger generations just wanting "everything for free." The money rolls in six years into Kickstarter's existence, meaning nobody can claim that all this money is currently pouring in due to the embrace of some new platform, the popularity of which will quickly die away. The money rolls in for a video game, the exact kind of product that those who believe the myth would expect to be the most pirated.
What does this all mean? Kickstarter is on the verge of becoming the establishment now, if it isn't already. It's no longer the upstart experiment. It's firmly entrenched as a success story in the modern digital economy, taking its place alongside iTunes, Steam, and Netflix as snap-rebuttals to the old mythos. The truth is that there are conversations to be had about how to best operate within the digital economy, but those proselytizing the old gods against a greed that doesn't exist are no more useful in that discussion than flat-worlders might be in a conversation about astronomy. The myth is dead, gone the way of Zeus and relegated to a time before the counterexamples had borne fruit. The new question isn't whether content producers can get the public to pay for their goods; it's whether the now-established platforms can scale to keep up with the wider adoption of the platform.
Site performance is back up to speed. We're still monitoring everything. We've never seen anything like this. Thanks for your patience! #E3
This was in response to the insane amount of interest and traffic generated by Shenmue 3. People flocking to Kickstarter so fast that the site couldn't keep up. People who others will tell you just want everything for free. The myth is dead. Long live the new business models.
As you probably know by now, last summer, Elon Musk announced that he was freeing up all of Tesla's patents. He pointed out that he didn't believe patents made any sense, and they especially didn't make sense in the electric vehicle space where they were clearly holding innovation back. Because some investors still couldn't comprehend this -- and assumed (for months!) that there must be some sort of catch, earlier this year Musk clarified that, yes, he really, really meant it, and Tesla's patents were totally free. No need to obtain a license. No need to pay a fee. No need to talk to or tell Tesla about it -- just go and innovate.
Earlier this week, Ford made an announcement claiming that it, too, was opening up its patents -- but the details show that this is a lot more hype and PR than substance. First, unlike Tesla, it's not all of its patents, but rather a specific portfolio of electric vehicle patents. Second, and much more importantly, it's not open. At all. You still have to license them and you still have to pay. This is just Ford announcing "Hey, we have patents, come pay us to use them." That's not opening up those patents. It's marketing the fact that you need to license them. This is the opposite of what Musk did with Tesla's patents.
To access Ford’s patents and published patent applications, interested parties can contact the company’s technology commercialization and licensing office, or work through AutoHarvest – an automaker collaborative innovation and licensing marketplace. AutoHarvest allows members to showcase capabilities and technologies, then privately connect with fellow inventors to explore technology and business development opportunities of mutual interest. The patents would be available for a fee.
And yet, nearly all of the press coverage worked exactly the way Ford intended: claiming that Ford was doing the same thing as Tesla. Here's just a sampling:
That last one is particularly hilarious. The title doesn't reference Tesla, but early in the article it does -- and again falsely claims that Ford's program is free:
If, as basic economic theory teaches, something is worth only what someone or group of people is willing to pay for it, then it seems the intellectual property associated with electric vehicles and hydrogen fuel cells is worthless.
Ford Motor is the latest car company to make this case. Today Ford joined Toyota Motor and Tesla Motors in making a vast range of patented electrification technologies available to its competitors. All free for serious EV developers.
Second, that's not what basic economic theory teaches at all. It's what ignorant armchair economists think it teaches. I know we have to go through this every few years, but price is not a measure of value. Price is determined by the intersection of supply and demand, and can be influenced by a number of different factors unrelated to value. The value to the buyer plays a role in determining the demand curve. Because if the price is less than the value derived, then that's when the buyer is likely to buy. But giving something away does not, in any way, mean that something is worthless.
And, again, this article misses the basic fact that Ford is not giving these away for free.
And people wonder why news publications are struggling to hold onto readers.
We've written a few times about Elon Musk and Tesla's decision to open up all of Tesla's patents, with a promise not to sue anyone for using them. We also found it funny when some reacted to it by complaining that it wasn't done for "altruistic" reasons, but to help Tesla, because of course: that's the whole point. Musk recognized that patents frequently hold back and limit innovation, especially around core infrastructure. Since then, Musk has said that, in fact, rivals are making use of his patents, even as GM insists it's not.
However, as some may recall, when Musk made the original announcement, the terms of freeing up the patents were at least a little vague. It said that Tesla "will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology." That "in good faith" claim had a few scratching their heads, and pointing out that still gave Tesla an out. We were a little disappointed that the company didn't make the terms entirely clear, believing that the "in good faith" line would likely scare away some companies from actually using the patents. However, recently, at the Detroit Auto Show, when questioned about this, Musk clarified that he really meant to make them completely free for anyone to use, no questions asked, no licensing discussions needed:
Around the three-minute mark someone asks how many automakers have taken Tesla up on the offer to use its patents, and Musk notes:
Musk: We actually don't require any formal discussions. So they can just go ahead and use them.
Reporter: Is there a licensing process?
Musk: No. You just use them. Which I think is better because then we don't need to get into any kind of discussions or whatever. So we don't know. I think you'll see it in the cars that come out, should they choose to use them.
In other words, Musk is saying what most of us assumed all along was the point. Hoarding the patents and blocking others doesn't help him at all. Letting others expand the market does. And licensing discussions are unnecessary friction and a waste of time.
All good, right?
Well, no. It appears that clueless Wall Street types are absolutely flipping out over this (possible registration wall). Some outfit called "Technology Equity Strategies," which doesn't seem to understand the first thing about how innovation actually works, posted an insanely long and ridiculously misguided note on how this is horrifying for anyone invested in Tesla. The descriptions are hilarious, where you can almost hear these Wall Street types pulling out their hair over this idea of *gasp* actually letting others use Tesla's patents. First, it notes that Musk called them "open source" patents, and spends way too much time detailing the "official" definition of open source, and then says that the patents are now "public domain" (apparently not recognizing that public domain and open source are not the same thing -- though in this case it might not matter). Technology Equity Strategies is very upset about this.
The restrictions in the June 12 blog of "good faith" and "we will not initiate" are over with. They are finished. These patents are either in the public domain, or they have at minimum been rendered unenforceable against all users, "good faith" or not.
Why? Because in their non-innovation minds, all they care about is how do you best value the stock, and giving up patents is giving up an asset. The note first (mistakenly) argues that many areas of the tech industry rely on patents as barriers to entry and that's where their advantage comes in (rather than execution, which is the truth). And so, it thinks now some other company will just come in and eat Tesla's lunch:
Is it possible that the massive capital and labor needed to attain leadership might not be eroded in by imitators in Asia, by large companies with resources to buy market share, by companies whose strengths are manufacturing process, global footprint and scale?
If so, the embedded option on a leader in a new niche in the auto industry and on a shift in the competitive dynamics in the auto industry might indeed be a valuable option.
But Mr. Musk was not interested in that. He is happy to give away the advantages that actually provide great profitability in some sectors of technology. He wants to compete as an auto company, in the brutal and capital intensive way that auto companies compete. More fundamentally, he is willing to eliminate the possibility in the future of competing as a technology company, which depend on the IP protections of patents, copyright, and trade secrets.
Of course, the reality is that Musk recognizes what many in this sector recognize: that sharing the ideas helps speed along innovation, creating greater and greater opportunities, which you can realize by executing well. Musk is confident in Tesla's ability to execute and (as we noted earlier) recognizes that sharing the patents actually helps Tesla by getting more electric vehicles on the market, meaning more overall infrastructure that makes Tesla cars more valuable.
This is the ridiculousness of Wall Street: sometimes it simply can't understand the nature of a non-zero sum game. Giving up any "advantage" is seen as helping others, without recognizing that helping others can also help you out tremendously. Instead, these investor types believe in the myth of intellectual property, that it's patents that make a company valuable:
Intellectual property is an important foundation for valuation technology companies. Funds that own Tesla may not be the same institutions who own GM or Ford, but many will be familiar with Qualcomm and ARM.
IP goes a long way in explaining why Qualcomm has a market cap of $110 billion, and ARM has a valuation of 23 billion (18x trailing revenues) while Nokia and Dell were sold for less than two times revenues. Nokia and Dell did fine work for a while as manufacturers and product companies. There was a time when they too looked like winners based on product execution. But they didn't own core IP, and so when product cycles shifted, they were left with little value.
Yes, ARM and Qualcomm are both patent-focused companies (that dip their toes into trolling all too often). And, yes, companies that don't execute well can lose out in the end, but cherry picking a few companies that have flopped on execution, while pointing to a few trollish companies as success stories, doesn't make a very strong argument. It's basically saying "yes, invest in the companies that don't believe in their own ability to execute, who have a fallback as a patent troll." That's not exactly a strong endorsement. Tesla believes in its own ability to innovate -- and these Wall Street guys think that's a bad thing.
And then there's the rewriting of history:
Let's look at Apple. Apple and Steve Jobs learned the hard way. Some of us will recall that an early Apple (believing that IP wasn't important) opened up its IP to the basic Mac interface with a royalty free license to Microsoft.
This resulted in Microsoft Windows taking nearly the entire PC market from Apple, and nearly bankrupting Apple. In his second chance, Steve Jobs learned about the importance of IP. This is a lesson that Mr. Musk failed to absorb.
Except, that's totally incorrect. While Apple had licensed a few aspects of its UI, that licensing agreement became meaningless by the time of Windows 2.0. Then Apple sued Microsoft and lost, because it was trying to use copyright law to claim things that could not be covered by copyright law. And that's not why the PC took over the market. So this isn't a lesson that Musk failed to absorb, because it never happened.
The Grand Gesture shows the worrisome sincerity in Musk's repeated statements that he is primarily on a mission to get other companies to sell a lot of electric vehicles, not to make money.
A worrisome sincerity? No, it's showing that Musk recognizes that if the market for electric vehicles does not grow massively, then he won't make money. He very much wants to make money, and a good way to do that is to build out the overall market for EVs, allowing Tesla to thrive. And these Wall Street folks first mock the idea that Musk might first invest to grow the market, by then... claiming that Asian makers might do the same thing:
No doubt Mr. Musk believes that if the industry embraces EVs, then Tesla will succeed as part of it. But is this plausible, that everything will just work out for the best. Is it plausible that Musk can succeed as a manufacturer in the U.S. competing against manufacturers in Asia who may take zero margins to grow a business, using Musk's proven designs? U.S. companies have learned over and over that IP is necessary to get a sustained profitable return on their innovations.
Actually, no. Plenty of tech companies don't think that IP is "necessary" to get sustained returns -- they think the opposite. Patents get in the way of profitability. They require lots of lawyer time and threats of lawsuits.
Frankly, Tesla opening up its patents seems like a move that shows how confident it is in its execution abilities, and makes the company a lot less likely to rest on its laurels and become nothing but a "licensing" company down the road. The fact that people who don't understand what a mess patents are and how they slow down innovation are now jumping in making ridiculous claims like Tesla's decision is why Apple can now jump into the EV car market just shows how little some people understand patents. The "myth" of patents as a powerful tool of innovation is still out there, and that's a shame.
"You can't compete with free!" is the mantra of a number of copyright maximalists -- and no matter how many times we show them examples of people successfully competing with free, it's still taken as inviolable law by some. Yet, here we are with yet another example of it happening anyway. As you know, last week the Senate Intelligence Committee finally released its CIA torture report (or, rather, the redacted version of the executive summary of the full report). It is a gripping read, and you can read the whole thing here (or embedded below). We can post it here for a variety of reasons, including the fact that the document is in the public domain, as a work of the federal government.
A little over ten years ago, we noted that the famed 9/11 Commission Report, despite also being in the public domain, had become a best seller in its printed version -- even though it, too, was in the public domain. It appears something similar is happening with the CIA torture report. There is a Kindle version that costs $2.99, and despite the report being available as a PDF (which can be viewed on Kindle), the fee-based version of the torture report is the number one seller in the "intelligence & espionage" section (beating out James Risen's recent book Pay Any Price). And this is happening despite the fact that people on Amazon are warning people not to buy the fee-based Kindle version, posting comments to tell them it's just a PDF that's available for free.
Yet, it appears that the convenience factor has made it worthwhile to an awful lot of people, who are willing to pay the money rather than figure out how to get the PDF onto their kindle. As we've pointed out for years, things like convenience and ease-of-use are real selling points -- and it's why things like Netflix and Spotify have been shown to decrease infringement -- because it's worth paying a little extra for a better-to-use system.
Meanwhile, physical copies of the CIA torture report are being rushed out with at least one publisher, Melville House, saying it will be out by the end of the year -- though, I'd imagine others will follow suit. In Michele Boldrin and David Levine's book, Against Intellectual Monopoly, they have a fascinating discussion on how publisher W.W. Norton made out wonderfully in being the first to publish a hard copy of the 9/11 Commission Report, despite not having to pay any copyright royalties:
The 81-year-old publisher struck an unusual publishing
deal with the 9/11 commission back in May: Norton agreed
to issue the paperback version of the report on the day of
its public release.…Norton did not pay for the publishing
rights, but had to foot the bill for a rush printing and
shipping job; the commission did not hand over the
manuscript until the last possible moment, in order to
prevent leaks. The company will not reveal how much this
cost, or when precisely it obtained the report. But expedited
printings always cost extra, making it that much more
difficult for Norton to realize a profit.
In addition, the commission and Norton agreed in May on
the 568-page tome's rather low cover price of $10, making
it that much harder for the publisher to recoup its costs.
(Amazon.com is currently selling copies for $8 plus
shipping, while visitors to the Government Printing Office
bookstore in Washington, D.C. can purchase its version of
the report for $8.50.) There is also competition from the
commission's Web site, which is offering a downloadable
copy of the report for free. And Norton also agreed to
provide one free copy to the family of every 9/11 victim.
As Boldrin and Levine point out, according to copyright system supporters, this situation couldn't possibly work out. After all, Norton is agreeing to publish a work that anyone can get for free, and which any other publisher (including the federal government) can offer for sale at a lower price. In fact, the book notes, a rival publisher, St. Martin's, teamed up with the NY Times and got a second physical copy on the market just a couple of weeks after Norton's physical copy, and priced it at $8.50. Clearly, Norton got a bad deal, right? And yet, Norton sold 1.1 million copies of the book, and donated $600,000 in "profits" from the book to charity. But, you know, you can't compete with free (and public domain).
We've written about the CD Projekt team in the past, typically concerning something awesome it's done with one of its games. Often times this means bucking the trend on DRM in game after game, even as competitors insist that DRM is necessary. Even when the company has gone down the road of going after infringers, it has quickly reversed course in listening to fans. Most recently, CD Projekt is looking to buck the DLC trend that has so many gamers annoyed these days. It's not that Witcher 3 won't have DLC. It totally will, except that the DLC is going to be completely free and available to anyone for simply purchasing the game.
As CD PROJEKT RED, we strongly believe this is not the way it should work and, with The Witcher 3: Wild Hunt, we have decided to do it differently. Cutting to the chase, everyone who buys Wild Hunt will receive 16 specially prepared DLCs absolutely for free, regardless of platform. You don’t have to pre-order, you don’t have to buy any special edition to get them -- if you own a copy of Wild Hunt, they’re yours. This is our way of saying thank you for buying our game.”
What a shock, rather than taking the avenue of other game companies, such as Ubisoft and EA, CD Projekt treats their customers well, behaving in an awesome and human way and even connecting with gamers with a shared experience, and success is had. They listen, in other words, rather than simply try to dictate. As part of this announcement, the company is insisting that there will be no restrictions on getting the DLC. They even have a long Q&A below the blog post to reiterate that point.
Is this something of a gimmick? Undoubtedly. After all, the company could simply wait until all this DLC content is finished and include it in the final product. On the other hand, their competitors could do the same and include all the DLC they put out for free or raise the pricing of the game. The message CD Projekt is conveying is that it isn't going to attempt to nickle and dime its fans. Gimmick or not, it's a message that resonates in the days of paid DLC.
In the wake of the somewhat confusing move by mega-band U2 to release their latest album for free on iTunes, we noted the comments from frontman Bono, who rushed to decry the concept of free for music and who insisted that because he was paid it didn't really count as free. These comments must have been especially confusing for those that suddenly found the band's album in their iTunes cloud account, despite never having requested or wanted it there. Indeed, given some of the comments reacting to the promotional move, it seems the problem with free might not be on the content producer's side, but on the consumer's instead.
If you’re trying to convince me that the stuff I store in my cloud is safe, don’t open up my cloud without permission. It’s easy to imagine Apple’s thinking here: What’s better than a free gift? A free gift that you don’t have to go get! But a gift on my doorstep is one thing. A gift that you left in my house, after letting yourself in, is something different.
Indeed, and it's not difficult to understand why some reacted less than favorably to the free album. First, despite Bono's insistence to the contrary, this was indeed the use of the concept of free as a promotional tool. Perhaps not for U2 as much as Apple, but that's what it was nevertheless. The problem wasn't that the album was free, but that the album appeared unbidden in the repository for a service that feels quite personal to the consumer. These were our cloud accounts that Apple invaded to leave their free stuff. You know what it's called when someone leaves you something you didn't want for free in your domain? It's called litter. And, in this case, it was litter that you couldn't even clean up. Just browse through a few of the reactions on the site WhoIsU2.com to get a sense:
It should take a couple steps, but it shouldn’t be that difficult. Head over to this page, which Apple put up this morning. Now you can make your collection Bono-free, or just “Songs of Innocence”-free, or whatever. The only catch appears to be that if you decide you do want your new free U2 album, you’ve only got a month to change your mind: After October 13, the only way to get it from iTunes will be by actually spending money.
Think about this for a second. For the first time in history, it seems, someone had to write some code to deliberately remove free music that was forced upon people. Like it was malware. How many people expected the digital music revolution to end up here?
Look, it's a great thing to see musicians and distributors continue to experiment with this sort of thing, but it's also important that lessons be learned as they do so. Today's lesson is that the internet is a back-and-forth, not simply a distribution channel that can be used to force products into the consumer's space. Perhaps next time they'll get this a bit more right.
As you may have heard, earlier this week Apple announced a bunch of things -- and that included that U2 was releasing a surprise new album that everyone who uses iTunes would magically get automatically for free in their library. That struck some people as interesting, given that the band has long crusaded angrily against "free." Four years ago, we wrote about how Paul McGuinness, the band's long-time manager, was railing against "free." Here's what he said at the time:
If you had to encapsulate the crisis of the music industry in the past decade, it would be in one momentous word: "free." The digital revolution essentially made music free. It is now doing the same with films and books. For years we (and by "we" I mean the music business, musicians, creative industries, governments and regulators) have grappled with this new concept of "free." One minute we have fought it like a monster, the next we have embraced it like a friend. As consumers, we have come to love "free" - but as creators, seeking reward for our work, it has become our worst nightmare. In recent years the music business has tried to "fight free with free," seeking revenues from advertising, merchandising, sponsorship - anything, in fact, other than the consumer's wallet. These efforts have achieved little success. Today, "free" is still the creative industries' biggest problem.
Bono has repeatedly attacked the idea of free music, complaining that it's "madness."
Music has become tap water, a utility, where for me it's a sacred thing, so I'm a little offended."
Funny, it seems even more ubiquitous under this deal.
Of course, the other side will argue, this is different. This is "okay" because they got paid upfront. Bono himself still seems offended by the concept of free, but insists this doesn't count because it's not really free:
“We were paid,” Bono tells TIME. “I don’t believe in free music. Music is a sacrament.”
Bono, U2’s lead singer, alluded to the deal himself at Apple’s event. After the band performed, he and Mr. Cook playfully negotiated over how the album could be released through iTunes “in five seconds.” Mr. Cook said it could if the album was given away free.
“But first you would have to pay for it,” Bono said, “because we’re not going in for the free music around here.”
Mr. Oseary, who took over management of the band less than a year ago, stressed in a phone interview after the event that the music still had value even though it was being given away.
“This is a gift from Apple to their customers,” Mr. Oseary said. “They bought it and they are giving it away.”
But, as per usual, this (once again) misunderstands the nature of "free." For years we've tried to hit back on this notion. As we've said free is not the business model, but free should be a key part of the business model, with the idea being that "free" helps the artists make more money. And that's exactly what's happened here. Now, of course, because of U2's stature and Apple's billions in cash, this could be done as a big upfront deal (rumors are saying that Apple will pay somewhere around $100 million total). But for others it may involve giving away stuff free to build a larger audience for shows. Or maybe it involves getting money upfront via a crowdfunding campaign and then sharing the music widely. Or maybe it involves using a tool like Patreon to get people to pay for each new track released, but still making them more widely available for free.
The point is that "free" is not some evil. It's something that the public really appreciates, and when done right fits very nicely in with a smart business model. For U2 that's collecting millions in cash from Apple. For others, it's other things. Free is not evil. It's a tool, and one that can be used to make people lots of money -- as U2 and Bono are realizing, even if they don't "realize" it. Amusingly, since these tracks are automatically showing up in everyone's iTunes, some are actually arguing that it becomes the equivalent of junk mail. In other words, there's an argument to be made that this promotion which effectively pushes "free" tracks even to people who don't want them does a lot more to decrease the value of the music than any sort of unauthorized files sharing. At least with file sharing, people get the free music because they want and value it.
In the end, though, I tend to agree with Amanda Palmer's take that everyone should be doing all kinds of business model experiments, so I certainly have no problem with this particular one. In fact, I think it's great.
It would just be nice if U2 and its managers could admit that maybe "free" isn't automatically evil.