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Free Information Has a Cost

Chris Anderson has a new business model for the information age: Give away most of what you create.

That provocative and seemingly paradoxical claim, which the editor of Wired magazine lays out in a new book that he is giving away online and charging a pricey $28.54 (with tax) for in hardcover, is part of a roiling debate on the future of news, information and intellectual property rights on the Internet.

Anderson's argument has been marred by claims that he plagiarized a few passages in the book from the online participatory information service Wikipedia. In a recent forum at online giant Google's offices here, Anderson blamed simple sloppiness for failing to footnote those passages, and said he had taken steps to correct his work online and for future publication.

But the flap, sparked by bloggers who pored through Anderson's new book, illustrates yet another side of a debate over who owns what, and who pays for what, in media.

Mass media companies that spend millions covering news and bringing live events and pertinent information to your doorstep, TV screen and computer are confronting a radical new future of individualized consumers. These companies have long depended upon advertisers of consumer products, services and causes to underwrite their business, and that advertising cost has been passed on in the final cost of the product or service.

But from social networks like Facebook to search engines like Google, the very existence of the traditional newspaper, even the book, is being challenged. The trend is accelerating because the emerging consumer audience, people under 30, has grown up expecting information to be plentiful, available a la carte based on their particular interests, and largely free. (At least free on the surface. More on that later).

In a breathtakingly short period, the media model has transformed from companies big and small controlling printing presses and television licenses, to one in which anyone can start a blog and dispense information and images to the digital world.

"We've lost our scarcity," Anderson said at the Google gaggle.

The music industry first confronted this trend in the battle over downloading, pirating and sharing songs on the Internet.

In "Free: The Future of a Radical Price," Anderson says that in this new world, businesses would be better off giving away some products in order to charge premiums for others. The goal, he said, is to build wide audiences and then profit off a small percentage of that audience's desire for premium information. Anderson even advances a wealthy-few-subsidizing-the-rest-of-us argument.

But isn't that counter to the egalitarian, democratization Internet ethos? And is an online product "free" if it is surrounded by advertising?

Anderson cites as a future media model The Wall Street Journal, which offers some stories free online but charges for others.

In the question-and-answer session at Google's hip, exposed-ductwork office, Anderson said he lived in a "world of paradoxes" by making a living editing and writing while raising children who have come to expect everything in that world to be free.

Anderson said he's selling his book in part for people who like to have volumes on shelves or to give as gifts. In other words, the packaging - not what he says - is the value.

Bob Boorstin, the former Clinton administration speechwriter and now Google's director of corporate and policy communications who moderated the discussion, couldn't resist wryly noting that Anderson would be signing books "for sale" after their talk.

But the questioners at Google appeared mostly supportive, and with good reason. Google has become a powerful global brand by offering an ostensibly free, ubiquitous service.

But how does Google pay for this chic office, the employees' salaries, their benefits, and anything else necessary to run the business?

The old-fashioned media way: advertising.

Lots of it, brilliantly embedded around key-word searches, often offering direct links for the person on the keyboard to purchase the products right there, online. It's a great service, and it pays the freight so that Google can help you search and link to content produced by others, including the companies that Anderson says ought to be giving away their products for free.

How is this known?

Simply Google "How does Google make money?" You'll get about 200 million responses - literally - claiming to answer the question.

A seemingly endless flow of information, and for free!

Well, sort of.

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