The Limitations of FREE; Godin vs. Gladwell

Way Wrong by demzpix

For Anderson, YouTube illustrates the principle that Free removes the necessity of aesthetic judgment. (As he puts it, YouTube proves that “crap is in the eye of the beholder.”) But, in order to make money, YouTube has been obliged to pay for programs that aren’t crap. To recap: YouTube is a great example of Free, except that Free technology ends up not being Free because of the way consumers respond to Free, fatally compromising YouTube’s ability to make money around Free, and forcing it to retreat from the “abundance thinking” that lies at the heart of Free. Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds.

–Malcolm Gladwell, Priced to Sell

Gladwell’s must-read New Yorker review of Chris Anderson’s Free: The Future of a Radical Price nails its short-sighted, conference circuit talking point to the wall for anyone to see, so I was a bit surprised and disappointed when Seth Godin offered a rather weak defense of Anderson’s work, simply titled “Malcolm is wrong“.

I became a big fan of Godin’s after reading Tribes last year, and honestly, much of what I’ve been doing over the past 6+ months here on the blog, at work, and in my side pursuits was inspired by its underlying message of “be the change you want to see in the world.” Both in Tribes and on his blog, he tends to keep things simple without belaboring the obvious, but sometimes that simplicity can be a major flaw, as it is in his support of Anderson’s hyper-simplistic premise.

Ironically, he uses poetry as an example to prove his point, but ends up doing the exact opposite:

In a world of free, everyone can play.

This is huge. When there are thousands of people writing about something, many will be willing to do it for free (like poets) and some of them might even be really good (like some poets). There is no poetry shortage.

While it’s true there is no poetry shortage, quantitatively speaking, the “everyone can play” idea was the basic premise of the poetry slam which ultimately proved to be tragically flawed and a perfect case study for new media evangelists.

When I ran my weekly poetry series back in the late-90s, the least-attended nights were usually the free open mics, when the smaller audiences were predominantly poets looking for stage time. The best, most-attended nights had a cover charge and were a curated mix of featured poets plus an open mic that attracted both poets and non-poets. It’s a pattern I’ve seen remain consistent over the years here in New York City, and it’s one that’s not unique to poetry readings.

The reality is that those who believe the democratizing effects of the social web will bring about dramatic changes in the valuation of content are wrong, and in some self-serving cases, are simply being disingenuous:

“Gatekeeper” is a four-letter word on the publishing industry’s conference circuit these days, a straw boogeyman invoked to elicit visions of old white men in leather chairs dictating what the masses should and shouldn’t be reading. Who needs traditional publishers when the almighty (and ever-changing) algorithm and the “wisdom of the crowds” threaten to extract the soul from all content, leaving us with LOLCATS, Jon and Kate and Blogola? There will always be gatekeepers of one form or another, whether traditional publishers or the crowd-sourced variety. In both cases, the crowds are usually led by a few vocal minorities, and both have a history of chasing trends while ignoring new voices and ideas, so what’s old is basically new again.

The Economist, the darling of the Content is King faction in the magazine world, has a worldwide circulation of over 1.3 million readers, 75% of which is via paid subscriptions. A one-year subscription to the respected weekly is $126.99, and while other newsweeklies have watched their circulation and advertising revenues collapse, they’ve reported “profit is up 26 percent (to almost $92 million ) and revenue is up 17 percent (to $513 million) for the fiscal year ending on March 31.”

“These results demonstrate once again that great brands delivering real value to readers and advertisers thrive even when the economic cycle turns and when the structure of the industry is evolving in the way information and advertising are consumed and delivered,” CEO Andrew Rashbass said in the release.

Content + Context = Value — for both consumers and advertisers — and in today’s rapidly shifting media landscape, that equation represents survival for publishers.

I do agree with Anderson and Godin’s underlying point, the “freemium” model — giving away some content while offering a more valuable experience for a premium — but it’s neither a new idea nor a terribly innovative one. Take a walk through Costco any Saturday and you’ll sample a variety of items they’re trying to entice you to buy, from crab dip to fancy chocolates; it’s a model drug dealers have perfected, both legitimate and illegal.

In fact, it’s the very model Anderson and Godin are both profiting very nicely from with their own work, leveraging their respective online platforms (and in Anderson’s case, his employer’s print platform) into lucrative, and ironically traditional, book deals and speaking gigs.

Of course, a freemium platform’s success is ultimately contingent on the quality and credibility of the content, starting with the free samples.

Based on the FREE samples Anderson has offered in interviews and at conferences, it’s not something I’d pay for because it doesn’t appear to add anything of value to the discussion; I’d argue he’s actually going the more traditional route, and extracting value from the discussion for his own gain.

Malcolm Gladwell FTW!

[UPDATE]: Andrew Keen, outspoken author of The Cult of the Amateur: How Today’s Internet is Killing Our Culture, sides with Gladwell on Twitter:

• Godin wrong.: “In a world of free, everyone can play.” Yes, but in world of free, 99% of people lose. Las Vegas rules. #
• winners in free economy are clever marketers like Godin, Anderson & myself. Neither fair nor fruitiful. Cheapening rather than enrichening. #
• annoying about Gladwell review of Free: he’s decimated argument so cleverly that there’s nothing else to say. What can I write in my review? #

Seth Godin is also tracking “The FREE Debate” over at Squidoo, including Anderson’s specious and evasive response to Gladwell’s review, “Dear Malcolm: Why so threatened?” that’s getting some very interesting comments. While this is heading into #EPICFAIL territory for Anderson, it likely won’t affect his book sales much, nor his speaking gigs.

As Godin notes, “Part of what Chris, Malcolm and I do for a living is make sweeping, provocative statements that don’t always include every nuance.” Sweeping, provocative statements lacking nuance are the lifeblood of both the conference circuit and real-time media.

Written by Guy LeCharles Gonzalez

Guy LeCharles Gonzalez is the Chief Content Officer for LibraryPass, and former publisher & marketing director for Writer’s Digest. Previously, he was also project lead for the Panorama Project; director, content strategy & audience development for Library Journal & School Library Journal; and founding director of programming & business development for the original Digital Book World.

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