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Against free

November 20, 2007

"Pay me for my content," says Jaron Lanier in a noble, if quixotic, op-ed in today's New York Times. Remembering his days as an "internet idealist" who wrote a pro-piracy manifesto, Lanier writes, "I was wrong. We were all wrong." He continues:

There’s an almost religious belief in the Valley that charging for content is bad. The only business plan in sight is ever more advertising ... How long must creative people wait for the Web’s new wealth to find a path to their doors? A decade is a long enough time that idealism and hope are no longer enough. If there’s one practice technologists ought to embrace, it is the evaluation of empirical results.

Lanier notes the odd, and sad, state of affairs we see online today, where people will happily purchase imaginary stuff in Second Life but refuse to cough up a few pennies for real stuff in Real Life. He argues that "information is free on the Internet because we created the system to be that way," and that the system can be changed if "software engineers and Internet evangelists" choose to redesign it so the creators of valuable works can charge for them.

I wish Lanier were right, but I fear he's falling back into internet idealism, the belief that the world's bugs can be fixed through some creative coding. "Free" comes more from the inherent economics of the digital world than from the technical structure of online distribution and commerce. You can try to change the structure, but if you can't change the economics your efforts will likely go for naught.

Comments

There is a very simple approach to solving this issue: give users a choice. Free content with advertising or paid content without. Many of the so-called casual gaming companies (e.g., PopCap) are using this model quite successfully. Why not other types of content.

If the content is valuable enough and the advertising annoying enough, people will pay. If not, where's the problem?

Posted by: Geva Perry at November 20, 2007 01:20 PM

I am paying you for your content.

I come to your site/blog/column to read your work. You show me ads and make money doing so. Yes, many of the ads you show me suck and diminish my experience, but that's a function of the state of the internet advertising 'ecosystem' (sorry). As cost-per-action advertising models gain greater traction and marketing technologies (and marketers) evolve, you'll actually start showing me ads that I'm glad to see - I'll be more happy about my total experience and you'll get paid more.

Because, while I like your content, I don't like it that much. So if you want to get "paid" for your content, go write a book.

Posted by: Lately at November 20, 2007 01:42 PM

As cost-per-action advertising models gain greater traction and marketing technologies (and marketers) evolve, you'll actually start showing me ads that I'm glad to see - I'll be more happy about my total experience and you'll get paid more.

Nirvana all around.

Posted by: Nick Carr at November 20, 2007 01:52 PM

People will pay for Internet content, in the cases of porn and financial information - which tells you something about what people value!

But more seriously, cultural content has always been a tough market. Newspapers are vehicles for classified ads, political magazines are notorious for being the pet projects of the wealthy (or even lobbying arms of the wealthy). The funding that we dare not speak its name is g-g-g-(gasp)-government.

No, we can't just "design information systems so that people can pay for content". Entrepeneurs HAVE tried. It can't simply be wished into existence.

Posted by: Seth Finkelstein at November 20, 2007 02:02 PM

Was Jaron Lanier ever an Internet evangelist? Sure, his big white dreads were a fixture in Wired magazine back in the early '90's, but IIRC he was never talking about TCP/IP or the WWW, but rather about "virtual reality" - a far more florid (and largely failed) vision than the Internet's stark, open simplicity. One can't help but suspect that Lanier's plea is really a thinly-disguised (and VERY wishful) bid to get the Internet redesigned the way he would have preferred to do it in the first place.

Regarding economics, I wonder if we'll start to see the idea of a fund for creators, paid for by a general levy on computer and communications gear and services, get any traction.

Posted by: Douglas K. Lay at November 20, 2007 02:27 PM

"'If there’s one practice technologists ought to embrace, it is the evaluation of empirical results...the system can be changed if "software engineers and Internet evangelists" choose to redesign it so the creators of valuable works can charge for them.

I wish Lanier were right'"

Nick, I'd like to hear more about why exactly you wish Lanier was right. Consider, e.g., this blog. I enjoy reading it. But the amount I'd be willing to pay for it is, to be honest, not all that high (in my defense, I am not what you'd call a high-powered earner). So if you started charging anything more than a nanopayment, I'd just quit reading. Therefore, this blog represents free value for me. Presumably, you're getting something out of this as well (or else you'd quit), be it increased book sales in the aggregate, the engagement of intelligent readers, enhanced reputation, Google ads revenue, or what-have-you. So this blog is a win-win for the pair of us. Why would you want to exclude me from it?

I don't mean to personalize, I just want to illustrate the point so I can get your view of the situation.

Posted by: Meelar at November 20, 2007 03:04 PM

Lately says:

You show me ads and make money doing so. Yes, many of the ads you show me suck and diminish my experience, but that's a function of the state of the internet advertising 'ecosystem' (sorry). As cost-per-action advertising models gain greater traction and marketing technologies (and marketers) evolve, you'll actually start showing me ads that I'm glad to see...

Nirvana? I don't think so.

a) From what you are suggesting, you would like to view very few, if any, ads. In that respect, you're like most of us. This will result in even less money percolating through the system. CPMs won't go up that much.

b) Your vision of the future is predicated upon an assumption that a certain half-baked technology will "evolve". Bet you don't feel the same way about DRM - which is the putative solution to Lanier's dilemma - and which would also have to "evolve" to better meet the needs of users. None of us knows which of these technologies, if any, will evolve to meet users' needs.

Lanier is right. It's about time that someone with Internet cred came out and said it.

Posted by: Bill Rosenblatt at November 20, 2007 03:53 PM

Lanier notes the odd, and sad, state of affairs we see online today, where people will happily purchase imaginary stuff in Second Life but refuse to cough up a few pennies for real stuff in Real Life.

That makes no sense to me. The problem is that music, writing, "content" is no more Real than the imaginary stuff purchased in Second Life.

Posted by: Rowan Nairn at November 20, 2007 04:17 PM

There is a very simple approach to solving this issue: give users a choice. Free content with advertising or paid content without. ...

Problem is, Google ads don't bring in enough to justify the time to create high quality content.

Consider, e.g., this blog. I enjoy reading it. But the amount I'd be willing to pay for it is, to be honest, not all that high. ...

Same thing. This is a blog, and its content is set to stun, not kill. Killer content takes real work. That's why Herr Carr writes books, too.

Anyhow, writers don't write just for money. If they just wanted money, they would apply their skills elsewhere -- even successful books don't make a lot of scratch.

Successful writing, whether a blog, a book or an article, is part of a person's larger plan. Each piece is a step towards ... whatever the person's after. Fame, influence, self expression, who knows what. But it's not just money (or they'll be disappointed). And chances are that they love to write.

Posted by: Sid Steward at November 20, 2007 04:52 PM

The current situation is not due to lack of solutions from technologists. There were a number of micropayment systems proposed in the mid-nineties, from David Chaum's DigiCash, DEC's Millicent to mention but a few.

I myself have a patent on a simple micropayment system I developed for France Telecom, that would require minimal effort to implement on the part of content vendors. In the end, FT made decent money out of it (several million dollars a year or so), but mostly as a vehicle for selling ring tones online.

Paying for content can only be viable if there is one (or very few )aggregate billing providers for customers to deal with without being nickel-and-dimed to death and deluged by hundreds of small bills. ISPs are a natural candidate, specially since they can identify you from your IP address. Most large US ISPs like AOL or MSN were more interested in developing doomed walled gardens, however, than in building cooperative marketplaces for content providers, unlike NTT DoCoMo with its wildly successful iMode mobile web system.

The market for micropayment never materialized and the ad-supported model won in the marketplace. It may be regrettable, but the current situation is the result of market forces, and too much venture capital money flooding the market and making paid content stillborn, not to lack of workable technological solutions.

Posted by: Fazal Majid at November 20, 2007 08:01 PM

Bill said "It's about time that someone with Internet cred came out and said it." but that wouldn't change a thing, cause the views of popular speakers aren't embraced because of their personality, it's the popularity of those speakers that stems from them speaking the mind of the people. And saying that the expectation of total freedom of information somehow degrades it's overall quality isn't exactly a popular notion.

Posted by: Sergey Schetinin at November 20, 2007 08:33 PM

Bah. Jaron is mostly right.

The problem is not that users don't directly pay for content. First, sometimes they do. Second, even if the users aren't paying someone is and, in the successful cases, they are paying more than the marginal cost of placing those ads around that content.

The problem is that whoever is paying, they aren't paying content creators for the most part -- they're paying glorified ISPs instead. That isn't a licensing/copyright problem, that's an economic and technical problem. If content creators could monetize their own content where the users want to be, rather than giving it freely to a privte aggregator, then Jaron's problem would be solved. The software technology behind popular web services is designed to give the hosts of those services monopolistic control over what server-side software is installed. There's no technical reason for that -- it just is. Change that, and content creators install their own hosting programs and, even in popular forums, charge advertisers (and other sources of monetization) directly.

This is actually kind of important for the open source industry, in my view, because it is the only escape from being limited to software services and support products which whose price is constrained to be but some fraction of overall corporate IT budgets. That is, if the "content creators" can get paid, then so to can the software developers behind the delivery of that content (said software being, really, an aspect of the content itself).

See:

http://www.crynwr.com/cgi-bin/ezmlm-cgi?mss:11938:200711:ckhkcafnphgmblmhdcoj

-t

Posted by: Tom Lord at November 20, 2007 08:49 PM

I think Tom hits it. I'm a big fan of the collaborative side of open source and most of the side effects; but I'm disappointed that the only viable economic models for creatives and coders in ten years are going to be advertising and wage slave. We're losing the ability to gain leverage from creativity; just compare the market cap of redhat with that of a previous generation software company with similar market share.

Make software and want to make a living? Provide services. Write music and want to make a living? Tour.

Posted by: Jim Stogdill at November 20, 2007 10:50 PM

Bloggers should get themselves sponsored, like Nascar drivers. Yes, your sponsors stuff will be all over your site, but at least you'll make money.

Posted by: Jonathan Sapir at November 21, 2007 10:51 AM

It's a psycho-social phenomenon as much as anything else: the freebie mentality was instilled from day one and people have been trained by more than a decade of free websites, free downloads, piracy, etc. Younger folks know only a world of free online stuff -- who's going to charge them?

It's just like the electorate that wants government to do lots of things but won't countenance tax increases. People expect free websites, but run ad blockers.

But if Nick had been kinder to Kindle, ala Steven Levy in Newsweak, a link to Amazon's product page might have made him some money, but nooooooo. When is Mr. Carr going to learn to play ball?

Posted by: Kendall Brookfeld at November 21, 2007 11:03 AM

They are many ways to make money out of the Internet: Freemium (free samples, paying extra — Nick, that would be your books), sponsorship deals (that would be Scoble's HD company), automated ads (AdWords) or banners; three are advertising, but not all should be shameful to a journalist, if he had the decency to note that a majority of the money made, even by serious papers, comes from advertising. Is it making sense after ten years? Nope, not yet — but please go on experimenting.

Ring-tones & virtual goods are social signals, the same way carrying a certain newspaper means a lot: why doesn't he try to create a social signal for his readers to boast? A “I pay for good information” badge to put on a website, the right to forward clips to his friends with no ads, the right to comment, etc. Given the books that I’ve read from fellow journalists, I would also recommend writing a one: excuse my French, but your kind (Nick, feel included) have a bl**dy good writing style, and I really love it.

Oh, and regarding ‹‹ porn and financial information ››: people have a very limited rationality; they only pay when: 1. hormones prevent them for making proper decisions (porn buys are extremely impulsive, and I know it because I work for an ISP that made research on the subject); 2. it's easy to calculate whether it's worth it.

Posted by: Bertil at November 23, 2007 11:36 AM

Why hasn't one of the browser companies figured out a way to put a running cash balance into a browser, like iTunes has? I like something or I want to read all of something, I click a button to tip the site? Yes, they'd have a lot of transaction fees, but at the same time, they'd hold my money and they'd bundle lots of little transactions into one big one to each major site. There's got to be a way that it makes business sense. What kills paying for anything is the hassle and loss of privacy and everything else of registering, paying and being on the list of everything you might pay for, as much as the actual monetary cost. But if I could flip a quarter to good bloggers who wrote something i liked, I'd do that a dozen times a day, no sweat.

Posted by: Skip McCoy, American at November 30, 2007 12:59 AM

Just read a most relevant piece by Tim O'Reilly. It's full of first-hand research:

...

Obviously, the advertising model works famously for some kinds of content. But publishers are kidding themselves if they think that advertising will replace the revenue generated by current book sales. Current CPM (cost per thousand) rates for advertising range from $1 (the vast majority) to $20 at the high end, very targeted, high-value audiences. So if you have a 200 page book that sells 20,000 copies, generating 400,000 page views (assuming all 20,000 people read the entire book), you might generate a few hundred dollars from advertising even with an ad on every page. And that's before you develop your ad-serving technology or pay someone else a slice for handling the problem. Publishers and authors have to get a LOT more readers to bring you up to the level of revenue you get today from a printed book.

...

What's more, I think that the idea that there's sufficient unmet demand to justify radical price cuts is totally wrongheaded. Unlike music, which is quickly consumed (a song takes 3 to 4 minutes to listen to, and price elasticity does have an impact on whether you try a new song or listen to an old one again), many types of books require a substantial time commitment, and having more books available more cheaply doesn't mean any more books read. Regular readers already often have huge piles of unread books, as we end up buying more than we have time for. Time, not price, is the limiting factor.

...

Posted by: Sid Steward at December 6, 2007 10:28 AM

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