Chris Anderson is wrong. FreeDOM, not free, is the future of business

I respect Chris Anderson and his work regarding The Long Tail.  But his prediction that free is the future of business is wrong.  There are many reasons why.  I’ll start with the one I think is most critical.

“Free” increases alienation of labor

At the beginning of the industrial revolution, Karl Marx argued that under capitalism, workers inevitably lost control of their labor, and hence became separated from:

1) their humanity, being treated more like machines

2) their community, because everybody was equally interchangeable and no longer dependent on each other’s varied skills and interests

3) the act of production, since people had to do what they were told and couldn’t enjoy the process of creating from their heart

4) the product they produced, since it was now owned by somebody else (the capitalists)

What I and people around me were most excited about in the mid 1990s, when the Internet began to really take off, was the hope that we could reclaim our creativity and our labor.  Musicians wouldn’t have to “sell out” to record labels, writers could bypass “clueless” publishers, artists of all types could reach audiences directly.  This was the promise of the Web.

But now, over a decade later, instead of being brought closer to our labor and its fruits, people like Chris Anderson and Fred Wilson want to tear us farther away by putting a lot of convoluted monetization schemes between what we do and how we get paid. 

The people who enjoy the benefits of your product or service should be the ones who pay for it.  The more we remove the payee from the payer, the more problems and the less fairness we’ll have as a result.

Take the writers’ strike.  Those three dry months were the direct result of uncertainty regarding what would be fair compensation in a digital world where monetization doesn’t have a clear link to production.

If you write a story or draw a picture or record a song, the more you’re pushed away from the person who enjoys those things, the less likely it will be that you get compensated swiftly and fairly.  Instead of only you having your hand out, now there are several more hands (not to mention sharp elbows).

Furthermore, if you can’t see a clear and direct connection between what you do and what you earn, your work will suffer, because you will be less motivated, less energized, and less happy. Compensation is the best feedback there is. The more removed the compensation is, the more confused and frustrating the feedback will be, if it exists at all.

“But everything digital can be easily copied, so it must be free.”  Nonsense.  There are already existing technologies to stop, or at least minimize, wanton copying.  And I don’t mean DRM. 

It’s not really a technical issue at this point. It’s the attitude of free that needs to shift. Tech caused the copying problem and tech could solve it, if it wanted to.

Here’s the truth about the “free culture” movement:  geeks started it, geeks push it and geeks almost solely reap the financial rewards from it.

In January of 2003, I made a handshake deal with Brad Fitzpatrick who started LiveJournal and now works for Google.  The deal was that I would gather up cartoonists to sell comics on LiveJournal, and we would all share the proceeds.  After I spent considerable time, effort, and money, Brad reneged on the deal, deciding that LiveJournal’s culture wouldn’t/shouldn’t support paying for cartoons (or anything else, presumably). They preferred to steal comic strips and panels from the feeds that were set up by syndicates to supply cartoons to their client newspapers.  When I told Brad this was wrong, because the artists weren’t being paid, and free distribution would depress the price for online comics (which it did, severely), he actually told me that if the syndicates didn’t want their comics taken, they wouldn’t make it so easy for him to swipe them.  About two years later, syndicates (not known for keeping up with technology) started sending out cease and desist letters to get their feeds taken off LiveJournal.

From the beginning, geeks didn’t want to have to pay for any form of information or entertainment or service on the Internet.  And since they essentially were the Internet at that time, and because payment was difficult and vulnerable, anyway, the “everything must be free” culture took firm root.  Sure they needed music and art and animation and photos and stories and video to make what they created more interesting and more attractive, but they didn’t want to pay anybody for it.  They created the means to take it freely, and they did.  “Copyright is dead!” is the still the war cry of Robert Scoble and most everybody else in the tech world, who think of themselves as the good knights who have slaughtered a dreadful beast, those “greedy record labels” and everybody else who gets in their way of free.

Of course, they — the geeks — are the good guys here, in their own mind.  After all, they give stuff away all the time (Fitzpatrick was one of the original Open Source advocates), so why shouldn’t everybody else? 

Here’s why:

Geeks are in short supply relative to their high demand.  Giving away free code never put their jobs or their incomes at risk.  In fact, it enhanced their ability to earn money.  They could hack free code in their spare time for the fun of it (literally the FUN of it, as geeks are as passionate about their work as any other creator), but still earn high wages at their day jobs.  And they soon learned that the more platforms and applications and features and such that were out there, the higher in demand their skills were.  This worked for them uniquely, because hacking is still very new in the grand scheme of things.  Being a nascent industry made giving away their work an opportunity rather than a risk. 

It’s like Anderson’s Gillette example of giving away free razors so that people would buy the blades. 

A “free” strategy worked and still works for geeks.  But what about other professions?

The argument is that there is always something to sell, despite the profession.  For example, musicians can sell tickets to live performances instead of (gasp) making people pay for recordings. Okay, but what about singers who happen to be young mothers and don’t want to be on tour? And what happens when you get too old or too burned out or too sick to perform?

Hugh MacLeod is a popular cartoonist who gives away his work and does well financially by selling wine and whatever.  Okay, but what if the cartoonist isn’t a marketer like Hugh is, and what if her style requires a lot of time to produce, like Hugh’s doesn’t?

Well, then she needs to sell T-shirts and mouse pads, of course.

Can you imagine a lawyer or a doctor or a software engineer being told they must work long hours for free, but nevermind, they can make up for it by being a salesman after hours?

If a newspaper publishes a story that a nonstaff member writes, or a cartoon that a nonstaff member draws, they pay for that content, up to several hundred dollars, depending on the size of their readership.  This is justified because it’s this content that helps draw eyeballs to the ads that generate the revenue.  But TechCrunch is said to make over $200,000 a month in ad revenue — more than many newspapers do.  But does Michael Arrington pay for animations or any other outside content that he publishes?  No.  The people who create it are supposed to just feel happy and grateful that he ran it and gave them “exposure.”

Web culture scorns newspapers and magazines, known as “dead tree media.”  But “old media” generated income for great numbers of writers and artists and editors and photographers.  By contrast, the Web seemingly doesn’t care that those jobs (with their steady salary and much needed benefits like health insurance) are going away, but Web users still want all the skilled output of these talented, experienced, professional people to entertain and enrich them — for free.

Just like capitalists, geeks brought opportunity.  And just like capitalists, they’ve kept most of it to themselves, while collapsing the ability of countless others to even eke out a living, much less get mega-rich as so many geeks have.

If Karl Marx were alive today, instead of the dreaded capitalists, he would hate geeks.

But Marx was an angry extremist.  I’m neither anti-capitalism (I’m a Republican and an MBA, for pity sake) nor anti-geek (my beloved late husband was a geek at Intel).  But I do believe, as I’ve said many times, that we need to get other professionals more involved in molding Web culture.  The tech world has created a culture that uses non-techies for its own financial benefit, whether intentionally (which I don’t believe) or by misguided accident (yep, that one).  And “free” is at the basis of this exploitative, alienating culture. 

Despite what Anderson says, Free will not be the future of business, because justice and prudence will win out and not allow it to be.

Revenge of the Non-Nerds

My company, and I’m sure many others, are working to monetize non-techies via the Web. Among other things, this means changing web culture so that copyright is respected and protected.  The most successful way to bring this about is to give all Web users a clear and reasonable stake in doing so.

In the coming few years, I guarantee you’ll see less “take whatever you want, copyright be damned” attitude and more “hey, stealing content isn’t cool.”  The wealth the Web generates must be distributed fairly within the U.S. and to all countries overseas, and across all digital professions.  And it will be, as more non-techies gain power through tech companies like mine that take the “tech” for granted and focus on changing the world in a more thoughtful, deliberate way, not just blindly disrupting it.

See, the thing is, free isn’t the Web’s essence.  FREEDOM is.  People should be empowered to use their talents, skills, experience and passions to make money any way they can legally do so.  If one cartoonist wants to sell T-shirts or wine or cow dung, more power to him.  But if another wants to sell his drawings, then nobody should stand in his way or thwart his ability to do so because of their own “must be free” religion that denies artists the ability to be directly compensated for their work.

Everybody is different, and artists are especially unique.  One of the best comic strips of all times was Calvin and Hobbes.  There is no free business model that the creator, Bill Watterson, would have allowed.  He is so anti-commercial, he gave up millions of dollars by refusing to license Calvin and Hobbes for merchandise like T-shirts and stuffed animals.  Attaching ads to his work would be unthinkable.  And he’s so anti-social, to this day if somebody recognizes him in public, he will literally run away.  So public book signings, etc. wouldn’t work either.  In Chris Anderson’s world, Calvin and Hobbes would never have existed.   Surely, that’s not what we want.

More Problems with Anderson’s article (and coming book)

1) The concept of free is nothing new, as Anderson himself makes clear.  But he wants us to believe that “freenomics” is exploding and will change everything.  I don’t buy it.  Yes, “free” as a business model is now a lot more consciously held, and it certainly is getting (overly) emphasized, but we’ve always had it, and in a lot more pervasive ways that Anderson cites.

Ever stop at a McDonalds because you desperately needed a bathroom?  I expect we all have, and 95% of us likely purchased something while we were there, if for no other reason than to keep from being embarrassed.  What we really wanted (a toilet) was free, but we paid for an icy drink to get it, which in turn increased the likelihood that we would need another McDonalds down the road, and so it goes on any cross country trip — freenomics in action for the past half century!

If you think about what you actually want compared to what you’re paying for, you’ll see that “free” has always been a part of every transaction:

Free is already universal.  Making it a deliberate part of a business model is anything but earth shattering.

2)  “Free” is a misnomer.  As Anderson admits, the “free lunch” may be free for you, but somebody else is paying for it.  If “$0.00 is the future of business,” then why do we need “six broad categories” to set prices for this “priceless economy”?

Turns out that it’s not really free, after all. What a surprise.  But you can feel good, because you’ve been manipulated into thinking it’s free, and if you’re really lucky, some other sap is subsidizing you.

3) In all Anderson’s long description of how marginal costs are dropping to zero – thus supposedly securing the success of our free society – never once does he mention human beings. Any business person will tell you that human labor makes up the bulk of a company’s costs.  These costs will never, ever go to zero nor anywhere close to zero, because humans must be fed, housed and cared for on a daily basis.  Humans require regular paychecks, not to mention benefits, even if it’s just paying into social security and medicare by government mandate. 

4) Anderson uses all this sensational “free is the new norm” gimmickry to state his true thesis which is (I think…it’s so buried under hyperbole I can’t be certain) that as marginal costs of the digital economy go to zero, we will see increased processing power, storage and bandwidth being used for applications that were once cost prohibitive, and this will transform the world.

Yeah, okay.  So what?  Isn’t that what we already expect?  We’ve all lived for years with falling prices and increased performance.  I don’t think anybody is expecting innovation to end.  I doubt there is one single person in the world who thinks the Web that exists today will be the same in five years.  Or even next year.  How is this big news?

I must say I’m disappointed in Anderson’s thinking regarding free.  This Wired article just made me decide that I won’t buy his book when it comes out.  Without this free article, I likely would have, because of The Long Tail.

I wonder what he’d say about that ironic backfire to his free strategy.

Dawn Douglass is founder and CEO of a seed stage startup with a mission to monetize digital creatives, and to put Web and mobile users in control of their own social graph and compensate them for its use. Dawn’s blog is Dawnkey Notes. She can be reached at dawn at inkswig dot com.

Image credit: Wired Cover, March 2008