Understanding the Information Economy

Essential reblogs about technology, media and economics.

May 15

Distribution … now

Author: John Borthwick
http://www.borthwick.com/weblog/2009/04/19/699/

In February 1948, Communist leader Klement Gottwald stepped out on the balcony of a Baroque palace in Prague to address hundreds of thousands of his fellow citizens packed into Old Town Square. It was a crucial moment in Czech history - a fateful moment of the kind that occurs once or twice in a millennium.

Gottwald was flanked by his comrades, with Clementis standing next to him. There were snow flurries, it was cold, and Gottwald was bareheaded. The solicitous Clementis took off his own fur cap and set it on Gottwald’s head.

The Party propaganda section put out hundreds of thousands of copies of a photograph of that balcony with Gottwald, a fur cap on his head and comrades at his side, speaking to the nation. On that balcony the history of Communist Czechoslovakia was born. Every child knew the photograph from posters, schoolbooks, and museums.

Four years later Clementis was charged with treason and hanged. The propaganda section immediately airbrushed him out of history, and obviously, out of all the photographs as well. Ever since, Gottwald has stood on that balcony alone. Where Clementis once stood, there is only bare palace wall. All that remains of Clementis is the cap on Gottwald’s head.

Book of Laughter and Forgetting, Milan Kundera

The rise of social distribution networks

Over the past year there has been a rapid shift in social distribution online. I believe this evolution represents an important change in how people find and use things online. At betaworks I am seeing some of our companies get 15-20% of daily traffic via social distribution — and the percentage is growing. This post outlines some of the aspects of this shift that I think are most interesting. The post itself is somewhat of a collage of media and thinking.

Distribution is one of the oldest parts of the media business. Content is assumed to be king so long as you control the distribution flow to that content. From newspapers to NewsCorp companies have understand this model well. Yet this model has never suited the Internet very well. From the closed network ISP’s to Netcenter. Pathfinder to Active desktop, Excite Lycos, Pointcast to the Network computer. From attempts to differentially price bits to preset bookmarks on your browser — these are all attempts at gate keeping attention and navigation online. Yet the relative flatness of the internet and its hyperlinked structure has offered people the ability to route around these toll gates. Rather than client software or access the nexus of distribution became search. Today there seems to be a new distribution model that is emerging. One that is based on people’s ability to publically syndicate and distribute messages — aka content — in an open manner. This has been a part of the internet since day one — yet now its emerging in a different form — its not pages, its streams, its social and so its syndication. The tools serve to produce, consume, amplify and filter the stream. In the spirit of this new wave of Now Media here is a collage of data about this shift.

Dimensions of the now web and how is it different?

Start with this constant, real time, flowing stream of data getting published, republished, annotated and co-opt’d across a myriad of sites and tools. The social component is complex — consider where its happening. The facile view is to say its Twitter, Facebook, Tumblr or FriendFeed — pick your favorite service. But its much more than that because all these sites are, to varying degrees, becoming open and distributed. Its blogs, media storage sites (ie: twitpic) comment boards or moderation tools (ie: disqus) — a whole site can emerge around an issue — become relevant for week and then resubmerge into the morass of the data stream, even publishers are jumping in, only this week the Times pushed out the Times Wire. The now web — or real time web — is still very much under construction but we are back in the dark room trying to understand the dimensions and contours of something new, or even to how to map and outline its borders. Its exciting stuff.

Think streams …

First and foremost what emerges out of this is a new metaphor — think streams vs. pages. This seems like an abstract difference but I think its very important. Metaphors help us shape and structure our perspective, they serve as a foundation for how we map and what patterns we observe in the world. In the initial design of the web reading and writing (editing) were given equal consideration - yet for fifteen years the primary metaphor of the web has been pages and reading. The metaphors we used to circumscribe this possibility set were mostly drawn from books and architecture (pages, browser, sites etc.). Most of these metaphors were static and one way. The steam metaphor is fundamentally different. Its dynamic, it doesnt live very well within a page and still very much evolving. Figuring out where the stream metaphor came from is hard — my sense is that it emerged out of RSS. RSS introduced us to the concept of the web data as a stream — RSS itself became part of the delivery infrastructure but the metaphor it introduced us to is becoming an important part of our eveyday day lives.

A stream. A real time, flowing, dynamic stream of information — that we as users and participants can dip in and out of and whether we participate in them or simply observe we are are a part of this flow. Stowe Boyd talks about this as the web as flow: “the first glimmers of a web that isnt about pages and browsers” (see this video interview, view section 6 –> 7.50 mins in). This world of flow, of streams, contains a very different possibility set to the world of pages. Among other things it changes how we perceive needs. Overload isnt a problem anymore since we have no choice but to acknowledge that we cant wade through all this information. This isnt an inbox we have to empty, or a page we have to get to the bottom of — its a flow of data that we can dip into at will but we cant attempt to gain an all encompassing view of it. Dave Winer put it this way in a conversation over lunch about a year ago. He said “think about Twitter as a rope of information — at the outset you assume you can hold on to the rope. That you can read all the posts, handle all the replies and use Twitter as a communications tool, similar to IM — then at some point, as the number of people you follow and follow you rises — your hands begin to burn. You realize you cant hold the rope you need to just let go and observe the rope”. Over at Facebook Zuckerberg started by framing the flow of user data as a news feed — a direct reference to RSS — but more recently he shifted to talk about it as a stream: “… a continuous stream of information that delivers a deeper understanding for everyone participating in it. As this happens, people will no longer come to Facebook to consume a particular piece or type of content, but to consume and participate in the stream itself.” I have to finish up this section on the stream metaphor with a quote from Steve Gillmor. He is talking about a new version of Friendfeed, but more generally he is talking about real time streams. The content and the language — this stuff is stirring souls.

We’re seeing a new Beatles emerging in this new morning of creativity, a series of devices and software constructs that empower us with both the personal meaning of our lives and the intuitive combinations of serendipity and found material and the sturdiness that only rigorous practice brings. The ideas and sculpture, the rendering of this supple brine, we’ll stand in awe of it as it is polished to a sparkling sheen. (full article here)

Now, Now, Now

The real time aspect of these streams is essential. At betaworks we are big believers in real time as a disruptive force — it’s an important aspect of many of our companies — it’s why we invested a lot of money into making bit.ly real time. I remember when Jack Dorsey first saw bit.ly’s plus or info page (the page you get to by putting a “+” at the end of any bit.ly URL) – he said this is “great but it updates on 30 min cycles, you need to make it real time”. This was August of ‘08 — I registered the thought, but also thought he was nuts. Here we sit in the spring of ‘09 and we invested months in making bit.ly real time – it works, and it matters. Jack was right — its what people want to see the effects on how a meme is are spreading — real time. It makes sense — watching a 30 min delay on a stream — is somewhere between weird and useless. You can see an example of the real time bit.ly traffic flow to an URL here. Another betaworks company, Someecards, is getting 20% of daily traffic from Twitter. One of the founders Brook Lundy said the following “real time is now vital to what do. Take the swine flu — within minutes of the news that a pandemic level 5 had been declared — we had an ecard out on Twitter”. Sardonic, ironic, edgy ecards — who would have thought they would go real time. Instead of me waxing on about real time let me pass the baton over to Om — he summarizes the shift as well as one could:

  1. “The web is transitioning from mere interactivity to a more dynamic, real-time web where read-write functions are heading towards balanced synchronicity. The real-time web, as I have argued in the past, is the next logical step in the Internet’s evolution. (read)
  2. The complete disaggregation of the web in parallel with the slow decline of the destination web. (read)
  3. More and more people are publishing more and more “social objects” and sharing them online. That data deluge is creating a new kind of search opportunity. (read)”

Only connect …

The social aspects of this real time stream are clearly a core and emerging property. Real time gives this ambient stream a degree of connectedness that other online media types haven’t. Presence, chat, IRC and instant messaging all gave us glimmers of what was to come but the “one to one” nature of IM meant that we could never truly experience its social value. It was thrilling to know someone else was on the network at the same time as you — and very useful to be able to message them but it was one to one. Similarly IRC and chats rooms were open to one to many and many to many communications but they usually weren’t public. And in instances that they were public the tools to moderate and manage the network of interactions were missing or crude. In contrast the connectedness or density of real time social interactions emerging today is astounding — as the examples in the collage above illustrate. Yet its early days. There are a host of interesting questions on the social front. One of the most interesting is, I think, how willthe different activity streams intersect and combine / recombine or will they simple compete with one another? The two dominant, semi-public, activity streams today are Facebook and Twitter. It is easy to think about them as similar and bound for head on competition — yet the structure of these two networks is fairly different. Whether its possible or desirable to combine these streams is an emerging question — I suspect the answer is that over time they will merge but its worth thinking about the differences when thinking about ways to bring them together. The key difference I observe between them are:

#1. Friending on Facebook is symmetrical — on Twitter it’s asymmetrical. On Facebook if I follow you, you need to follow me, not so on Twitter, on Twitter I can follow you and you can never notice or care. Similarly, I can unfollow you and again you may never notice or care. This is an important difference. When I ran Fotolog I observed the dynamics associated with an asymmetrical friend network — it is, I think, a closer approximation of the way human beings manage social relationships. And I wonder the extent to which the Facebook sysmetrical friend network was / is product of the audience for which Facebook was intially created (students). When I was a student I was happy to have a symmetrical social network, today not so much.

#2. The data on Facebook is assumed to be mostly private, or shared within private groups, Facebook itself has been mostly closed to the open web — and Facebook asserts a level of ownership over the data that passes through its network. In contrast the data on Twitter is assumed to be public and Twitter asserts very few rights over the underlying data. These are broad statements — worth unpacking a bit. Facebook has been called a walled garden — there are real advantages to a walled garden — AOL certainly benefited from been closed to the web for a long long time. Yet the by product of a closed system is that (a) data is not accessible or searchable by the web in general –ie: you need to be inside the garden to navigate it (b) it assumes that the pace innovation inside the garden will match or exceed the rate of innovation outside of the garden and (c) the assertion of rights over the content within the garden means you have to mediate access and rights if and when those assets flow out of the garden. Twitter takes a different approach. The core of Twitter is a simple transport for the flow of data — the media associated with the post is not placed inline — so Twitter doesnt need to assert rights over it. Example — if I post a picture within Facebook, Facebook asserts ownership rights over that picture, they can reuse that picture as they see fit. If i leave Facebook they still have rights to use the image I posted. In contrast if I post a picture within Twitter the picture is hosted on which ever service I decided to use. What appears in Twitter is a simple link to that image. I as the creator of that image can decide whether I want those rights to be broad or narrow.

#3. Defined use case vs. open use case. Facebook is a fantastically well designed set of work-flows or use cases. I arrive on the site and it present me with a myriad of possible paths I can follow to find people, share and post items and receive /measure associated feedback. Yet the paths are defined for the users. If Facebook is the well organized, pre planned town Twitter is more like new urban-ism — its organic and the paths are formed by the users. Twitter is dead simple and the associated work-flows aren’t defined, I can devise them for myself (@replies, RT, hashtags all arose out of user behavior rather than a predefined UI. At Fotolog we had a similar set of emergent, user driven features. ie: groups formed organically and then over time the company integrated the now defined work-flow into the system). There are people who will swear Twitter is a communications platform, like email or IM — other say its micro-blogging — others say its broadcast — and the answer is that its all of the above and more. Its work flows are open available to be defined by users and developers alike. Form and content are separated in way that makes work-flows, or use cases open to interpretation and needs.

As I write this post Facebook is rapidly re-inventing itself on all three of the dimensions above. It is changing at a pace that is remarkable for a company with its size membership. I think its changing because Facebook have understood that they cant attempt to control the stream — they need to turn themselves inside out and become part of the web stream. The next couple of years are going to be pretty interesting. Maybe E.M. Forrester had it nailed in Howard’s End: Only connect! That was the whole of her sermon … Live in fragments no longer.

The streams are open and distributed and context is vital

The streams of data that constitute this now web are open, distributed, often appropriated, sometimes filtered, sometimes curated but often raw. The streams make up a composite view of communications and media — one that is almost collage like (see composite media and wholes vs. centers). To varying degrees the streams are open to search / navigation tools and its very often long, long tail stuff. Let me run out some data as an example. I pulled a day of bit.ly data — all the bit.ly links that were clicked on May 6th. The 50 most popular links generated only 4.4% (647,538) of the total number of clicks. The top 10 URL’s were responsible for half (2%) of those 647,538 clicks. 50% of the total clicks (14m) went to links that received 48 clicks or less. A full 37% of the links that day received only 1 click. This is a very very long and flat tail — its more like a pancake. I see this as a very healthy data set that is emerging.

Weeding out context out of this stream of data is vital. Today context is provided mostly via social interactions and gestures. People send out a message — with some context in the message itself and then the network picks up from there. The message is often re-tweeted, favorite’d, liked or re-blogged, its appropriated usually with attribution to creator or the source message — sometimes its categorized with a tag of some form and then curation occurs around that tag — and all this time, around it spins picking up velocity and more context as it swirls. Over time tools will emerge to provide real context to these pile up’s. Semantic extraction services like Calais, Freebase, Zemanta, Glue, kynetx and Twine will offer a windows of context into the stream — as will better trending and search tools. I believe search gets redefined in this world, as it collides with navigation– I blogged at length on the subject last winter. And filtering becomes a critical part of this puzzle. Friendfeed is doing fascinating things with filters — allowing you to navigate and search in ways that a year ago could never have been imagined.

Think chunk
Traffic isnt distributed evenly in this new world. All of a sudden crowds can show up on your site. This breaks with the stream metaphor a little — its easy to think of flows in the stream as steady — but you have to think in bursts — this is where words like swarms become appropriate. Some data to illustrate this shift. The charts below are tracking the number of users simultaneously on a site. The site is a political blog. You can see on the left that the daily traffic flows are fairly predictable — peaking around 40-60 users on the site on an average day, peaks are around mid day. Weekends are slow — the chart is tracking Monday to Monday, from them wednesday seems to be the strongest day of the week — at least it was last week. But then take a look at the chart on the right — tracking the same data for the last 30 days. You can see that on four occasions over the last 30 days all of a sudden the traffic was more than 10x the norm. Digging into these spikes — they were either driven by a pile up on Twitter, Facebook, Digg or a feature on one of the blog aggregation sites. What do you do when out of no where 1000 people show up on your site?

CB traffic minnesotaindependent.com

The other week I was sitting in NY on 14th street and 9th Avenue with a colleague talking about this stuff. We were accross the street from the Apple store and it struck me that there was a perfect example of a service that was setup to respond to chunky traffic. If 5,000 people show up at an Apple store in the next 10 minutes — they know what to do. It may not be perfect but they manage the flow of people in and out of the store, start a line outside, bring people standing outside water as they wait. maybe take names so people can leave and come back. I’ve experienced all of the above while waiting in line at that store. Apple has figured out how to manage swarms like a museum or public event would. Most businesses and web sites have no idea how to do this. Traffic in the other iterations of the web was more or less smooth but the future isnt smooth — its chunky. So what to do when a burst takes place? I have no real idea whats going to emerge here but cursory thoughts include making sure the author is present to manage comments etc., build in a dynamic mechanism to alert the crowd to other related items? Beyond that its not clear to me but I think its a question that will be answered — since users are asking it. Where we are starting at betaworks is making sure the tools are in place to at least find out if a swarm has shown up on your site. The example above was tracked using Chartbeat — a service we developed. We dont know what to do yet — but we do know that the first step is making sure you actually know that the tree fell — real time.

Where is Clementis’s hat? Where is the history?

I love that quote from Kundera. The activity streams that are emerging online are all these shards — these ambient shards of people’s lives. How do we map these shards to form and retain a sense of history? Like the hat objects exist and ebb and flow with or without context. The burden to construct and make sense of all of this information flow is placed, today, mostly on people. In contrast to an authoritarian state eliminating history — today history is disappearing given a deluge of flow, a lack of tools to navigate and provide context about the past. The cacophony of the crowd erases the past and affirms the present. It started with search and now its accelerated with the now web. I dont know where it leads but I almost want a remember button — like the like or favorite. Something that registers something as a memory — as an salient fact that I for one can draw out of the stream at a later time. Its strangely compforting to know everything is out there but with little sense of priority of ability to find it it becomes like a mythical library — its there but we cant access it.

Unfinished

This media is unfinished, it evolves, it doesnt get finished or completed. Take the two quotes below — both from Brian Eno, but fifteen years apart — they outline some of the boundaries of this aspect of the stream.

In a blinding flash of inspiration, the other day I realized that “interactive” anything is the wrong word. Interactive makes you imagine people sitting with their hands on controls, some kind of gamelike thing. The right word is “unfinished.” Think of cultural products, or art works, or the people who use them even, as being unfinished. Permanently unfinished. We come from a cultural heritage that says things have a “nature,” and that this nature is fixed and describable. We find more and more that this idea is insupportable - the “nature” of something is not by any means singular, and depends on where and when you find it, and what you want it for. The functional identity of things is a product of our interaction with them. And our own identities are products of our interaction with everything else. Now a lot of cultures far more “primitive” than ours take this entirely for granted - surely it is the whole basis of animism that the universe is a living, changing, changeable place. Does this make clearer why I welcome that African thing? It’s not nostalgia or admiration of the exotic - it’s saying, Here is a bundle of ideas that we would do well to learn from. (Eno, Wired interview, 1995)

In an age of digital perfectability, it takes quite a lot of courage to say, “Leave it alone” and, if you do decide to make changes, [it takes] quite a lot of judgment to know at which point you stop. A lot of technology offers you the chance to make everything completely, wonderfully perfect, and thus to take out whatever residue of human life there was in the work to start with. It would be as though someone approached Cezanne and said, “You know, if you used Photoshop you could get rid of all those annoying brush marks and just have really nice, flat color surfaces.” It’s a misunderstanding to think that the traces of human activity — brushstrokes, tuning drift, arrhythmia — are not part of the work. They are the fundamental texture of the work, the fine grain of it. (Eno, Wired interview, 2008)

The media, these messages, stream — is clearly unfinished and constantly evolving as this post will likely also evolve as we learn more about the now web and the emerging social distribution networks.

Gottwald minus Clementis


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Mar 14

Old Growth Media And The Future Of News

Author: Steven Johnson
http://www.stevenberlinjohnson.com/2009/03/the-following-is-a-speech-i-gave-yesterday-at-the-south-by-southwest-interactive-festival-in-austiniif-you-happened-to-being.html

The following is a speech I gave yesterday at the South By Southwest Interactive Festival in Austin.

 
I

If you happened to be hanging out in front of the old College Hill Bookstore in Providence Rhode Island in 1987, on the third week of every month you would have seen a skinny 19-year-old in baggy pants, sporting a vaguely Morrissey-like haircut, walking into the bookstore several times a day.

That kid was me. I wish I could tell you that I was making those compulsive return visits out of a passionate love of books. While I do, in fact, have a passionate love of books, and bought plenty of them during my college years, I was making those tactical strikes on the College Hill Bookstore for another reason.

I was looking for the latest issue of MacWorld.

I had learned from experience that new issues of the monthly magazine devoted to all things Macintosh arrived at College Hill reliably in the third week of the month. Yes, you could subscribe, but for some reason, subscription copies tended to arrive a few days later than the copies in the College Hill bookstore. And so when that time of the month rolled around, I’d organize my week around regular check-ins at College Hill to see if a shipment of MacWorlds had landed on their magazine rack.

This was obsessive behavior, I admit, but not entirely irrational. It was the result of a kind of imbalance: not a chemical imbalance, an information imbalance. To understand what I want to say about the future of the news ecosystem, it’s essential that we travel back to my holding pattern outside the College Hill Bookstore — which continued unabated, by the way, for three years. It’s essential to travel back because we’re in the middle of an epic conversation about the potentially devastating effect that the web is having on our news institutions. And so if we’re  going to have a responsible conversation about the future of news, we need to start by talking about the past.

We need to be reminded of what life was like before the web.

I made my monthly pilgrimages to College Hill because I was interested in the Mac, which was, it should be said, a niche interest in 1987, though not that much of a niche. Apple was one of the world’s largest creators of personal computers, and by far the most innovative. But if you wanted to find out news about the Mac — new machines from Apple, the latest word on the upcoming System 7 or HyperCard, or any new releases from the thousands of software developers or peripheral manufacturers — if you wanted to keep up with any of this, there was just about one channel available to you, as a college student in Providence Rhode Island. You read MacWorld.

And even then, even if you staked out the College Hill Bookstore waiting for issues hot off the press, you were still getting the news a month or two late, given the long-lead times of a print magazine back then. Yes, if Apple had a major product announcement, or fired Steve Jobs, it would make it into the New York Times or the Wall Street Journal the next day. And you could occasionally steal a few nuggets of news by hanging around the University computer store. But that was pretty much it.

When I left college and came to New York in the early nineties, the technology channels began to widen ever so slightly. At some point in that period, I joined Compuserve, and discovered that MacWeek magazine was uploading its articles every Friday night at around six, which quickly became a kind of nerd version of appointment television for me. The information lag went from months to days. In 1993, Wired Magazine launched, and suddenly I had access not only to an amazing monthly repository of technology news, but also a new kind of in-depth analysis that had never appeared in the pages of MacWorld.

Within a few years, the web arrived, and soon after I was reading a site called Macintouch, which featured daily updates and commentary on everything from new printer driver releases to the future of the Mac clone business. Tech critics like Scott Rosenberg and Andrew Leonard at Salon wrote tens of thousands of words on the latest developments at Apple. (I wrote a few thousand myself at FEED.) Sometime around then, Apple launched its first official web site; now I could get breaking news about the company directly from them, the second they announced it.

We all know where this is headed, but let me spell it out just for the record. If 19-year-old Steven could fast-forward to the present day, he would no doubt be amazed by all the Apple technology – the iPhones and MacBook Airs – but I think he would be just as amazed by the sheer volume and diversity of the information about Apple available now. In the old days, it might have taken months for details from a John Sculley keynote to make to the College Hill Bookstore; now the lag is seconds, with dozens of people liveblogging every passing phrase from a Jobs speech. There are 8,000-word dissections of each new release of OS X at Ars Technica, written with attention to detail and technical sophistication that far exceeds anything a traditional newspaper would ever attempt. Writers like John Gruber or Don Norman regularly post intricate critiques of user interface issues. (I probably read twenty mini-essays about Safari’s new tab design.) The traditional newspapers have improved their coverage as well: think of David Pogue’s reviews, or Walt Mossberg’s Personal Technology site. And that’s not even mentioning the rumor blogs.

And of course, MacWorld is still around as a print magazine, but they also now have a web site. Yesterday alone, they published twenty-six different articles on Apple-related topics.

 

II

The metaphors we use to think about changes in media have a lot to tell us about the particular moment we’re in. McLuhan talked about media as an extension of our central nervous system, and we spent forty years trying to figure out how media was re-wiring our brains. The metaphor you hear now is different, more E.O. Wilson than McLuhan: the ecosystem. I happen to think that this is a useful way of thinking about what’s happening to us now: today’s media is in fact much closer to a real-world ecosystem in the way it circulates information than it is like the old industrial, top-down models of mass media. It’s a much more diverse and interconnected world, a system of flows and feeds – completely different from an assembly line. That complexity is what makes it so interesting, of course, but also what makes it so hard to predict what it’s going to look like in five or ten years. So instead of starting with the future, I propose that we look to the past.

To use that ecosystem metaphor: the state of Mac news in 1987 was a barren desert. Today, it is a thriving rain forest. By almost every important standard, the state of Mac news has vastly improved since 1987: there is more volume, diversity, timeliness, and depth.

I think that steady transformation from desert to jungle may be the single most important trend we should be looking at when we talk about the future of news. Not the future of the news industry, or the print newspaper business: the future of news itself. Because there are really two worst case scenarios that we’re concerned about right now, and it’s important to distinguish between them. There is panic that newspapers are going to disappear as businesses. And then there’s panic that crucial information is going to disappear with them, that we’re going to suffer as culture because newspapers will no long be able to afford to generate the information we’ve relied on for so many years.

When you hear people sound alarms about the future of news, they often gravitate to two key endangered species: war reporters and investigative journalists. Will the bloggers get out of their pajamas and head up the Baghdad bureau? Will they do the kind of relentless shoe-leather detective work that made Woodward and Bernstein household names? These are genuinely important questions, and I think we have good reason to be optimistic about their answers. But you can’t see the reasons for that optimism by looking at the current state of investigative journalism in the blogosphere, because the new ecosystem of investigative journalism is in its infancy. There are dozens of interesting projects being spearheaded by very smart people, some of them nonprofits, some for-profit. But they are seedlings.

I think it’s much more instructive to anticipate the future of investigative journalism by looking at the past of technology journalism. When ecologists go into the field to research natural ecosystems, they seek out the old-growth forests, the places where nature has had the longest amount of time to evolve and diversify and interconnect. They don’t study the Brazilian rain forest by looking at a field that was clear cut two years ago.

That’s why the ecosystem of technology news is so crucial. It is the old-growth forest of the web. It is the sub-genre of news that has had the longest time to evolve. The Web doesn’t have some kind intrinsic aptitude for covering technology better than other fields. It just has an intrinsic tendency to cover technology first, because the first people that used the web were far more interested in technology than they were in, say, school board meetings or the NFL. But that has changed, and is continuing to change. The transformation from the desert of Macworld to the rich diversity of today’s tech coverage is happening in all areas of news. Like William Gibson’s future, it’s just not evenly distributed yet.

 

III

Consider another – slightly less nerdy — case study: politics. The first Presidential election that I followed in an obsessive way was the 1992 election that Clinton won. I was as compulsive a news junkie about that campaign as I was about the Mac in college: every day the Times would have a handful of stories about the campaign stops or debates or latest polls. Every night I would dutifully tune into Crossfire to hear what the punditocracy had to say about the day’s events. I read Newsweek and Time and the New Republic, and scoured the New Yorker for its occasional political pieces. When the debates aired, I’d watch religiously and stay up late soaking in the commentary from the assembled experts.

That was hardly a desert, to be sure. But compare it to the information channels that were available to me following the 2008 election. Everything I relied on in 1992 was still around of course – except for the late, lamented Crossfire – but it was now part of a vast new forest of news, data, opinion, satire – and perhaps most importantly, direct experience. Sites like Talking Points Memo and Politico did extensive direct reporting. Daily Kos provided in-depth surveys and field reports on state races that the Times would never have had the ink to cover. Individual bloggers like Andrew Sullivan responded to each twist in the news cycle; HuffPo culled the most provocative opinion pieces from the rest of the blogosphere. Nate Silver at fivethirtyeight.com did meta-analysis of polling that blew away anything William Schneider dreamed of doing on CNN in 1992. When the economy imploded in September, I followed economist bloggers like Brad DeLong to get their expert take the candidates’ responses to the crisis. (Yochai Benchler talks about this phenomenon of academics engaging with the news cycle in a smart response here.) I watched the debates with a thousand virtual friends live-Twittering alongside me on the couch. All this was filtered and remixed through the extraordinary political satire of John Stewart and Stephen Colbert, which I watched via viral clips on the Web as much as I watched on TV.

What’s more: the ecosystem of political news also included information coming directly from the candidates. Think about the Philadelphia race speech, arguably one of the two or three most important events in the whole campaign. Eight million people watched it on YouTube alone. Now, what would have happened to that speech had it been delivered in 1992? Would any of the networks have aired it in its entirety? Certainly not. It would have been reduced to a minute-long soundbite on the evening news. CNN probably would have aired it live, which might have meant that 500,000 people caught it.  Fox News and MSNBC? They didn’t exist yet. A few serious newspaper might have reprinted it in its entirety, which might have added another million to the audience. Online perhaps someone would have uploaded a transcript to Compuserve or The Well, but that’s about the most we could have hoped for.

There is no question in mind my mind that the political news ecosystem of 2008 was far superior to that of 1992: I had more information about the state of the race, the tactics of both campaigns, the issues they were wrestling with, the mind of the electorate in different regions of the country. And I had more immediate access to the candidates themselves: their speeches and unscripted exchanges; their body language and position papers.

The old line on this new diversity was that it was fundamentally parasitic: bloggers were interesting, sure, but if the traditional news organizations went away, the bloggers would have nothing to write about, since most of what they did was link to professionally reported stories. Let me be clear: traditional news organizations were an important part of the 2008 ecosystem, no doubt about it. I loved reading Frank Rich’s reliably sensible responses to each passing media frenzy; and certainly Katie Couric’s interview with Sarah Palin was every bit as important as Obama’s race speech in shaping our sense of the candidates. (Though I suspect Couric’s interview would have had much less impact without CBS’s viral distribution of the clips on the Web.) But no reasonable observer of the political news ecosystem could describe all the new species as parasites on the traditional media. Imagine how many barrels of ink were purchased to print newspaper commentary on Obama’s San Francisco gaffe about people “clinging to their guns and religion.” But the original reporting on that quote didn’t come from the Times or the Journal; it came from a “citizen reporter” named Mayhill Fowler, part of the Off The Bus project sponsored by Jay Rosen’s Newassignment.net and The Huffington Post.

I think the political web covering the 2008 campaign was so rich for precisely the same reasons that the technology web is so rich: because it’s old-growth media. The first wave of blogs were tech-focused, and then for whatever reason, they turned to politics next. And so Web 2.0-style political coverage has had a decade to mature into its current state.

What’s happened with technology and politics is happening elsewhere too, just on a different timetable. Sports, business, reviews of movies, books, restaurants – all the staples of the old newspaper format are proliferating online. There are more perspectives; there is more depth and more surface now. And that’s the new growth. It’s only started maturing.

In fact, I think in the long run, we’re going to look back at many facets of old media and realize that we were living in a desert disguised as a rain forest. Local news may be the best example of this. When people talk about the civic damage that a community suffers by losing its newspaper, one of the key things that people point to is the loss of local news coverage. But I suspect in ten years, when we look back at traditional local coverage, it will look much more like MacWorld circa 1987. I adore the City section of the New York Times, but every Sunday when I pick it up, there are only three or four stories in the whole section that I find interesting or relevant to my life – out of probably twenty stories total. And yet every week in my neighborhood there are easily twenty stories that I would be interested in reading: a mugging three blocks from my house; a new deli opening; a house sale; the baseball team at my kid’s school winning a big game. The New York Times can’t cover those things in a print paper not because of some journalistic failing on their part, but rather because the economics are all wrong: there are only a few thousand people potentially interested in those news events, in a city of 8 million people. There are metro area stories that matter to everyone in a city: mayoral races, school cuts, big snowstorms. But most of what we care about in our local experience lives in the long tail. We’ve never thought of it as a failing of the newspaper that its metro section didn’t report on a deli closing, because it wasn’t even conceivable that a big centralized paper could cover an event with such a small radius of interest.

But of course, that’s what the web can do. That’s one of the main reasons we created outside.in, because I found myself waking up in the morning and turning to local Brooklyn bloggers like Brownstoner, who were suddenly covering local news with a granularity that the Times had never attempted. Two years later, there are close to a thousand bloggers writing about Brooklyn: there are multiple blogs devoted to the Atlantic Yards real estate development; dozens following the Brooklyn foodie scene; music blogs, politics blogs, parenting blogs. The Times itself is now launching local Brooklyn blogs, which is great. As we get better at organizing all that content – both by selecting the best of it, and by sorting it geographically – our standards about what constitutes good local coverage are going to improve. We’re going to go through the same evolution that I did from reading two-month-old news in MacWorld, to expecting an instantaneous liveblog of a keynote announcement. Five years from now, if someone gets mugged within a half mile of my house, and I don’t get an email alert about it within three hours, it will be a sign that something is broken.

 

IV

So this is what the old-growth forests tell us: there is going to be more content, not less; more information, more analysis, more precision, a wider range of niches covered. You can see the process happening already in most of the major sections of the paper: tech, politics, finance, sports. Now I suppose it’s possible that somehow investigative  or international reporting won’t thrive on its own in this new ecosystem, that we’ll look back in ten years and realize that most everything improved except for those two areas. But I think it’s just as possible that all this innovation elsewhere will free up the traditional media to focus on things like war reporting because they won’t need to pay for all the other content they’ve historically had to produce. This is Jeff Jarvis’ motto: do what you do best, and link to the rest. My guess is that the venerable tradition of the muckraking journalist will be alive and well ten years from: partially supported by newspapers and magazines, partially by non-profit foundations and innovative programs like Newassignment.net, and partially by enterprising bloggers who make a name for themselves by breaking important stories.

Now there’s one objection to this ecosystems view of news that I take very seriously. It is far more complicated to navigate this new world than it is to sit down with your morning paper. There are vastly more options to choose from, and of course, there’s more noise now. For every Ars Technica there are a dozen lame rumor sites that just make things up with no accountability whatsoever. I’m confident that I get far more useful information from the new ecosystem than I did from traditional media along fifteen years ago, but I pride myself on being a very savvy information navigator. Can we expect the general public to navigate the new ecosystem with the same skill and discretion?

Let’s say for the sake of argument that we can’t. Let’s say it’s just too overwhelming for the average consumer to sort through all the new voices available online, to separate fact from fiction, reporting from rumor-mongering. Let’s say they need some kind of authoritative guide, to help them find all the useful information that’s proliferating out there in the wild.

If only there were some institution that had a reputation for journalistic integrity that had a staff of trained editors and a growing audience arriving at its web site every day seeking quality information. If only…

Of course, we have thousands of these institutions.  They’re called newspapers.

The funny thing about newspapers today is that their audience is growing at a remarkable clip. Their underlying business model is being attacked by multiple forces, but their online audience is growing faster than their print audience is shrinking. As of January, print circulation had declined from 62 million to 49 million since my days at the College Hill Bookstore. But their online audience has grown from zero to 75 million over that period. Measured by pure audience interest, newspapers have never been more relevant. If they embrace this role as an authoritative guide to the entire ecosystem of news, if they stop paying for content that the web is already generating on its own, I suspect in the long run they will be as sustainable and as vital as they have ever been. The implied motto of every paper in the country should be: all the news that’s fit to link.

This is what I think the ecosystem will ultimately look like:


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Mar 13

Newspapers and Thinking the Unthinkable

Author: Clay Shirky
http://www.shirky.com/weblog/2009/03/newspapers-and-thinking-the-unthinkable/

Back in 1993, the Knight-Ridder newspaper chain began investigating piracy of Dave Barry’s popular column, which was published by the Miami Herald and syndicated widely. In the course of tracking down the sources of unlicensed distribution, they found many things, including the copying of his column to alt.fan.dave_barry on usenet; a 2000-person strong mailing list also reading pirated versions; and a teenager in the Midwest who was doing some of the copying himself, because he loved Barry’s work so much he wanted everybody to be able to read it.

One of the people I was hanging around with online back then was Gordy Thompson, who managed internet services at the New York Times. I remember Thompson saying something to the effect of “When a 14 year old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you got a problem.” I think about that conversation a lot these days.

The problem newspapers face isn’t that they didn’t see the internet coming. They not only saw it miles off, they figured out early on that they needed a plan to deal with it, and during the early 90s they came up with not just one plan but several. One was to partner with companies like America Online, a fast-growing subscription service that was less chaotic than the open internet. Another plan was to educate the public about the behaviors required of them by copyright law. New payment models such as micropayments were proposed. Alternatively, they could pursue the profit margins enjoyed by radio and TV, if they became purely ad-supported. Still another plan was to convince tech firms to make their hardware and software less capable of sharing, or to partner with the businesses running data networks to achieve the same goal. Then there was the nuclear option: sue copyright infringers directly, making an example of them.

As these ideas were articulated, there was intense debate about the merits of various scenarios. Would DRM or walled gardens work better? Shouldn’t we try a carrot-and-stick approach, with education and prosecution? And so on. In all this conversation, there was one scenario that was widely regarded as unthinkable, a scenario that didn’t get much discussion in the nation’s newsrooms, for the obvious reason.

The unthinkable scenario unfolded something like this: The ability to share content wouldn’t shrink, it would grow. Walled gardens would prove unpopular. Digital advertising would reduce inefficiencies, and therefore profits. Dislike of micropayments would prevent widespread use. People would resist being educated to act against their own desires. Old habits of advertisers and readers would not transfer online. Even ferocious litigation would be inadequate to constrain massive, sustained law-breaking. (Prohibition redux.) Hardware and software vendors would not regard copyright holders as allies, nor would they regard customers as enemies. DRM’s requirement that the attacker be allowed to decode the content would be an insuperable flaw. And, per Thompson, suing people who love something so much they want to share it would piss them off.

Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists, while those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven’t been ordinary, however. Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world was increasingly resembling the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans but saviors.

When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.

* * *

The curious thing about the various plans hatched in the ’90s is that they were, at base, all the same plan: “Here’s how we’re going to preserve the old forms of organization in a world of cheap perfect copies!” The details differed, but the core assumption behind all imagined outcomes (save the unthinkable one) was that the organizational form of the newspaper, as a general-purpose vehicle for publishing a variety of news and opinion, was basically sound, and only needed a digital facelift. As a result, the conversation has degenerated into the enthusiastic grasping at straws, pursued by skeptical responses.

“The Wall Street Journal has a paywall, so we can too!” (Financial information is one of the few kinds of information whose recipients don’t want to share.) “Micropayments work for iTunes, so they will work for us!” (Micropayments work only where the provider can avoid competitive business models.) “The New York Times should charge for content!” (They’ve tried, with QPass and later TimesSelect.) “Cook’s Illustrated and Consumer Reports are doing fine on subscriptions!” (Those publications forgo ad revenues; users are paying not just for content but for unimpeachability.) “We’ll form a cartel!” (…and hand a competitive advantage to every ad-supported media firm in the world.)

Round and round this goes, with the people committed to saving newspapers demanding to know “If the old model is broken, what will work in its place?” To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the internet just broke.

With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves — the incredible difficulty, complexity, and expense of making something available to the public — has stopped being a problem.

* * *

Elizabeth Eisenstein’s magisterial treatment of Gutenberg’s invention, The Printing Press as an Agent of Change, opens with a recounting of her research into the early history of the printing press. She was able to find many descriptions of life in the early 1400s, the era before movable type. Literacy was limited, the Catholic Church was the pan-European political force, Mass was in Latin, and the average book was the Bible. She was also able to find endless descriptions of life in the late 1500s, after Gutenberg’s invention had started to spread. Literacy was on the rise, as were books written in contemporary languages, Copernicus had published his epochal work on astronomy, and Martin Luther’s use of the press to reform the Church was upending both religious and political stability.

What Eisenstein focused on, though, was how many historians ignored the transition from one era to the other. To describe the world before or after the spread of print was child’s play; those dates were safely distanced from upheaval. But what was happening in 1500? The hard question Eisenstein’s book asks is “How did we get from the world before the printing press to the world after it? What was the revolution itself like?”

Chaotic, as it turns out. The Bible was translated into local languages; was this an educational boon or the work of the devil? Erotic novels appeared, prompting the same set of questions. Copies of Aristotle and Galen circulated widely, but direct encounter with the relevant texts revealed that the two sources clashed, tarnishing faith in the Ancients. As novelty spread, old institutions seemed exhausted while new ones seemed untrustworthy; as a result, people almost literally didn’t know what to think. If you can’t trust Aristotle, who can you trust?

During the wrenching transition to print, experiments were only revealed in retrospect to be turning points. Aldus Manutius, the Venetian printer and publisher, invented the smaller octavo volume along with italic type. What seemed like a minor change — take a book and shrink it — was in retrospect a key innovation in the democratization of the printed word. As books became cheaper, more portable, and therefore more desirable, they expanded the market for all publishers, heightening the value of literacy still further.

That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place. The importance of any given experiment isn’t apparent at the moment it appears; big changes stall, small changes spread. Even the revolutionaries can’t predict what will happen. Agreements on all sides that core institutions must be protected are rendered meaningless by the very people doing the agreeing. (Luther and the Church both insisted, for years, that whatever else happened, no one was talking about a schism.) Ancient social bargains, once disrupted, can neither be mended nor quickly replaced, since any such bargain takes decades to solidify.

And so it is today. When someone demands to know how we are going to replace newspapers, they are really demanding to be told that we are not living through a revolution. They are demanding to be told that old systems won’t break before new systems are in place. They are demanding to be told that ancient social bargains aren’t in peril, that core institutions will be spared, that new methods of spreading information will improve previous practice rather than upending it. They are demanding to be lied to.

There are fewer and fewer people who can convincingly tell such a lie.

* * *

If you want to know why newspapers are in such trouble, the most salient fact is this: Printing presses are terrifically expensive to set up and to run. This bit of economics, normal since Gutenberg, limits competition while creating positive returns to scale for the press owner, a happy pair of economic effects that feed on each other. In a notional town with two perfectly balanced newspapers, one paper would eventually generate some small advantage — a breaking story, a key interview — at which point both advertisers and readers would come to prefer it, however slightly. That paper would in turn find it easier to capture the next dollar of advertising, at lower expense, than the competition. This would increase its dominance, which would further deepen those preferences, repeat chorus. The end result is either geographic or demographic segmentation among papers, or one paper holding a monopoly on the local mainstream audience.

For a long time, longer than anyone in the newspaper business has been alive in fact, print journalism has been intertwined with these economics. The expense of printing created an environment where Wal-Mart was willing to subsidize the Baghdad bureau. This wasn’t because of any deep link between advertising and reporting, nor was it about any real desire on the part of Wal-Mart to have their marketing budget go to international correspondents. It was just an accident. Advertisers had little choice other than to have their money used that way, since they didn’t really have any other vehicle for display ads.

The old difficulties and costs of printing forced everyone doing it into a similar set of organizational models; it was this similarity that made us regard Daily Racing Form and L’Osservatore Romano as being in the same business. That the relationship between advertisers, publishers, and journalists has been ratified by a century of cultural practice doesn’t make it any less accidental.

The competition-deflecting effects of printing cost got destroyed by the internet, where everyone pays for the infrastructure, and then everyone gets to use it. And when Wal-Mart, and the local Maytag dealer, and the law firm hiring a secretary, and that kid down the block selling his bike, were all able to use that infrastructure to get out of their old relationship with the publisher, they did. They’d never really signed up to fund the Baghdad bureau anyway.

* * *

Print media does much of society’s heavy journalistic lifting, from flooding the zone — covering every angle of a huge story — to the daily grind of attending the City Council meeting, just in case. This coverage creates benefits even for people who aren’t newspaper readers, because the work of print journalists is used by everyone from politicians to district attorneys to talk radio hosts to bloggers. The newspaper people often note that newspapers benefit society as a whole. This is true, but irrelevant to the problem at hand; “You’re gonna miss us when we’re gone!” has never been much of a business model. So who covers all that news if some significant fraction of the currently employed newspaper people lose their jobs?

I don’t know. Nobody knows. We’re collectively living through 1500, when it’s easier to see what’s broken than what will replace it. The internet turns 40 this fall. Access by the general public is less than half that age. Web use, as a normal part of life for a majority of the developed world, is less than half that age. We just got here. Even the revolutionaries can’t predict what will happen.

Imagine, in 1996, asking some net-savvy soul to expound on the potential of craigslist, then a year old and not yet incorporated. The answer you’d almost certainly have gotten would be extrapolation: “Mailing lists can be powerful tools”, “Social effects are intertwining with digital networks”, blah blah blah. What no one would have told you, could have told you, was what actually happened: craiglist became a critical piece of infrastructure. Not the idea of craigslist, or the business model, or even the software driving it. Craigslist itself spread to cover hundreds of cities and has become a part of public consciousness about what is now possible. Experiments are only revealed in retrospect to be turning points.

In craigslist’s gradual shift from ‘interesting if minor’ to ‘essential and transformative’, there is one possible answer to the question “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did, as octavo volumes did.

Journalism has always been subsidized. Sometimes it’s been Wal-Mart and the kid with the bike. Sometimes it’s been Richard Mellon Scaife. Increasingly, it’s you and me, donating our time. The list of models that are obviously working today, like Consumer Reports and NPR, like ProPublica and WikiLeaks, can’t be expanded to cover any general case, but then nothing is going to cover the general case.

Society doesn’t need newspapers. What we need is journalism. For a century, the imperatives to strengthen journalism and to strengthen newspapers have been so tightly wound as to be indistinguishable. That’s been a fine accident to have, but when that accident stops, as it is stopping before our eyes, we’re going to need lots of other ways to strengthen journalism instead.

When we shift our attention from ’save newspapers’ to ’save society’, the imperative changes from ‘preserve the current institutions’ to ‘do whatever works.’ And what works today isn’t the same as what used to work.

We don’t know who the Aldus Manutius of the current age is. It could be Craig Newmark, or Caterina Fake. It could be Martin Nisenholtz, or Emily Bell. It could be some 19 year old kid few of us have heard of, working on something we won’t recognize as vital until a decade hence. Any experiment, though, designed to provide new models for journalism is going to be an improvement over hiding from the real, especially in a year when, for many papers, the unthinkable future is already in the past.

For the next few decades, journalism will be made up of overlapping special cases. Many of these models will rely on amateurs as researchers and writers. Many of these models will rely on sponsorship or grants or endowments instead of revenues. Many of these models will rely on excitable 14 year olds distributing the results. Many of these models will fail. No one experiment is going to replace what we are now losing with the demise of news on paper, but over time, the collection of new experiments that do work might give us the journalism we need.


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May 3

The Grand Unified Theory On The Economics Of Free

Author: Mike Masnick
http://www.techdirt.com/articles/20070503/012939.shtml

The Grand Unified Theory On The Economics Of Free

from the have-fun-with-it dept

Ok. I’ll be the first to admit that I’ve taken the long way around in going through my series of posts exploring the economics of goods when scarcity is removed. What I had thought would be a series of 5 or 6 posts, turned into something much longer — but each week people came up with new questions or discussions or objections, and so I tried to spend some time digging down on various pieces of the economics at hand. However, what I haven’t done is tie it all together in one single spot. In the last couple of weeks there’s been tremendous confusion among people from Scott Adams to CNN to various others that have made it abundantly clear that the one thing I’ve failed to do is put the whole concept together in a single place. That’s resulted in people being confused about what I’m actually saying — where they only pick up a tiny piece of the argument or confuse it with the arguments made by others. So, while I still think it was important to go through the details, now is as good a time as any to pull the whole theory together (with some links back to the previous articles in the series).

First off, and this is key, none of what I put forth is about defending unauthorized downloads. I don’t download unauthorized content (never have) and I certainly don’t suggest you do either. You may very well end up in a lawsuit and you may very well end up having to pay a lot of money. It’s just not a good idea. This whole series is from the other perspective — from that of the content creator and hopefully explaining why they should encourage people to get their content for free. That’s because of two important, but simple points:

  1. If done correctly, you can increase your market-size greatly.
  2. If you don’t, someone else will do it correctly, and your existing business model will be in serious trouble
If that first point is explained clearly, then hopefully the second point becomes self-evident. However, many people immediately ask, how is it possible that giving away a product can guarantee that you’ve increased your market size? The first thing to understand is that we’re never suggesting people just give away content and then hope and pray that some secondary market will grant them money. Giving stuff away for free needs to be part of a complete business model that recognizes the economic realities. We’ll get to more details on that in a second.

From a high-level perspective, though, the reason that giving non-scarce products away for free will increase your market size goes back to the same Thomas Jefferson quote that we kicked the series off with:
If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.
What Jefferson noted is the wonderful feature of a non-scarce, or infinite, good that it is effectively a free resource. Once created, it costs nothing to give to someone else, and you still retain the original. In fact, economists have finally realized that this is the very key to economic growth and progress. The infinite resource known as an “idea” that improves what was already there is what increases the size of a market. Or, putting it another way, that infinite resource of a new idea makes an existing scarce resource more valuable. It’s easy to understand that when it’s an idea applied to, say, a machine making it more productive — but it also applies to any infinite resource appropriately bundled with any scarce resource.

The way it works is actually quite easy and fits in with the same basic economics that’s always been in place. Knocking down the barriers of artificial scarcity opens up tremendous new opportunities — just as knocking down the artificial scarcity known as “protectionism” helps to grow markets by creating new opportunities. In this case, those new opportunities have only increased in number as we’ve gone digital, making more content infinite in nature. Where some people have trouble is that those new opportunities may be in different places than the existing opportunities — and those new opportunities may not all be capturable by the creator of the content. Indeed, there will be some externalities created by the free flow of an infinite resource. However, the total amount that any content creator can capture is still much larger than it was before. It’s one of those cases where getting 20% of a huge pie is much better than getting 90% of a tiny pie.

You just start by redefining the market based on the benefits of what you’re providing, rather than the specific product you’re selling. If you’re focused on selling the benefits, then discovering a better way to sell those benefits is seen as a good thing, rather than a threat. You then break down the different components that make up those benefits that you’re selling — and you begin to recognize that every bundle of goods and services that make up the benefit you’re selling has components that are scare as well as components that are infinite. In fact, if you look closely enough, you realize that any scarce product you buy actually has infinite components while any infinite good you see also tends to have scarce components.

Once you’ve broken out the components, however, recognizing that the infinite components are what make the scarce components more valuable at no extra cost, you set those free. Not only do you set those free, you have every incentive to create more of them, and encourage more people to get them. You break them into easily accessible bites. You syndicate them. You hand them out. You make them easy to share and embed and distribute and promote. And, yet, all the while, you know exactly what scarce resources those non-scarce goods are tied to, and you’re ready to sell those scarce resources, recognizing that the more people who are consuming the infinite goods, the more valuable your scarce resource is.

So, the simple bulletpoint version:
  1. Redefine the market based on the benefits
  2. Break the benefits down into scarce and infinite components.
  3. Set the infinite components free, syndicate them, make them easy to get — all to increase the value of the scarce components
  4. Charge for the scarce components that are tied to infinite components
You can apply this to almost any market (though, in some it’s more complex than others). Since this post is already way too long, we’ll just take an easy example of the recording industry:
  1. Redefine the market: The benefit is musical enjoyment
  2. Break the benefits down (not a complete list…): Infinite components: the music itself. Scarce components: access to the musicians, concert tickets, merchandise, creation of new songs, CDs, private concerts, backstage passes, time, anyone’s attention, etc. etc. etc.
  3. Set the infinite components free: Put them on websites, file sharing networks, BitTorrent, social network sites wherever you can, while promoting the free songs and getting more publicity for the band itself — all of which increases the value for the final step
  4. Charge for the scarce components: Concert tickets are more valuable. Access to the band is more valuable. Getting the band to write a special song (sponsorship?) is more valuable. Merchandise is more valuable.
What the band has done in this case is use the infinite good to increase the value of everything else they have to offer. They’ve increased their marketsize by recognizing how they can use the infinite goods as a free promotional resource and made the value of the overall ecosystem around them more valuable. Rather than playing small shows in tiny clubs that don’t pay very well, they get to play large venues with bigger covers. It’s certainly true that there are some externalities — where some people will enjoy the music for free without ever taking part in paying for the scarce components. But, when done right, you’ve increased your market so much that it more than covers the difference. Compare this solution to that of a band that sticks to the old way: they are then limited in the audience that will hear them — especially as more and more bands give their music away for free. Fewer people will be interested in going to their concerts or buying their merchandise or joining their fan clubs — when the benefits are so much greater for following other artists that actually give their music away for free. The end result really is a much bigger market with much greater benefit by expanding the market by using infinite goods to make the scarce goods more valuable.

So there you have it. After many months, one single summary of the economics of “free” and how it can be used to anyone’s advantage. It’s not about defending unauthorized downloads. It’s not even about getting rid of copyright — just recognizing that copyright holders can actually be better off ignoring their own copyrights. It’s very much about showing the key trends that are impacting all infinite goods — and pointing out a clear path to benefiting from it (while making life more difficult on those who refuse to give up their old business models). And we’re giving it to you all… for free. So, enjoy.



If you’re looking to catch up on the posts in the series, I’ve listed them out below:


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