Making Money by Giving Stuff Away

Glyn Moody has a thoughtful piece up at Computer World UK, summarizing what a lot of thinkers have been saying about digital goods for some time. That is, that there are precedents, originally from the free software and open source world, for business models that thrive despite the trend of the marginal cost of production and distribution of digital goods to drop towards zero.

Glyn provides a decent survey of some of the models that have largely been proven to work. He generalizes the common element, essentially a cross subsidy between the free digital good and some scarce, analog good or service for which creators can still effectively charge and derive enough money to fuel further creation.

He closes with some quotes from a photographer’s manifesto as an artist that sums up this whole trend almost poetically.

Because the money to be earned is not on things that can be copied. That’s a lost battle. If you’re a musician, you can make more money on concerts and events. If you’re a photographer, more money can be made by shooting specific assignments for customers, or on photography workshops. If you’re a writer, you can make more money by participating as a speaker at conferences. The era of making something and making your livelihood from just selling copies of it is nearing its end. And getting your creations known to the widest possible audience is the key for getting work that can’t be replicated.

To be fair, there is still a considerable challenge faced by many creators in figuring out which scarcities remain from which they can earn a living. Glyn also hints at other models that work due to considerations that exist somewhat outside of the market, like those creators experimenting with pledge banks and other forms of patronage driven by direct, emotional connections with their audiences. (Maybe that emotional connection is also an analog scarcity?)

There is a longer post brewing in my mind that draws on much of what Glyn discusses here. Really what we are seeing is the rebuttal in action to what James Boyle characterizes as the Internet Threat in his book, “The Public Domain”. In brief, the threat is the idea that cheap copying erodes the value of existing intellectual property rights, driving industry to seek expansion of those rights as an offset for that loss. What pieces like this one are pointing to is that this is provably false, that more creative consideration of opportunities is more effective, with less regulation, at compensating for changes in value wrought by new technology.

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