Good post, although I think you didn't give enough emphasis to making money *because of* something, not just *with* something.

For example: - Google makes money *because of* search, *with* advertising. - many bloggers make money *because of* their blogging, *with* advertising, consulting/speaking fees, book publishing, etc. - some artists make money *because of* their free music/art, *with* something else

Not feasible always, I admit, but worth thinking.

I learned this powerful concept a couple of weeks ago from here (not the original source): http://confusedofcalcutta.com/2006/09/21/the-because-effect-and-the-future-of-marketing-and-ipr-and-maybe-even-the-net/

--Tommi Vilkamo, 30-Oct-2006


I will write my thoughts on this great response from the other side of the fence today...

In general, I just would not like to have my whole life depend on advertising revenue.

--Dragon, 30-Oct-2006


Tommi, you're right. But I wouldn't say that it's because of *free* art, it's because of their art. It's just that the business model they have chosen does not rely on shipping pieces of plastic to people.

Dragon, maybe I emphasized ad revenue too much, but there are other ways, too. E.g. BBC and YLE rely on public funding. Doesn't work for everyone, but it does work for some. The game industry is adopting the subscription model for some games. It's not really that much of a stretch to imagine more.

--JanneJalkanen, 31-Oct-2006


A few disparate comments...

Arguably all content has value. So if you forget about money only and think in terms of broader value exchange, the 'free goods' disappear.

Let's take commercial radio as an example: Radio is free for listeners, who get value in form of music. More listeners make a radio station more desirable to advertisers, in effect providing value for the station. The radio station exchanges this value of distribution (or the aural equivalent of visibility?) for money from the advertisers. But to close the circle, the station must acquire the music they play. They're providing value to the listeners and that value does not appear from thin air. Therefore they exchange money (gained from advertising) for the right to play music.

Aren't electricity (produced using current means) and gas consumables? ;)

P2P is a problem, because the creators are cut from the cycle of value. What comes to competing with P2P, price is only one way to compete. You could compete with availability, selection, findability (combination of the previous two?), reproduction quality, source authenticity... and you can still keep it free for the end user, provided that you can come up with a value cycle (aka business model) that draws value from the users in a different way or draws value from other sources and provides value for end users as a by-product. My hunch says the latter is less efficient.

--Niko, 01-Nov-2006


I actually have a feeling that P2P is a problem because it cuts distributors out of the value chain altogether. The creators are always there - even if they're not getting paid. But it's really the distributors who are afraid of the P2P model because a legal P2P system would be a real problem to their business. But this is cynical semantics :)

Gas and electricity are consumables, yes. But digital goods are not, and therefore they could have a zero price. Especially if it's data which is created automatically, like your surfing habits. Wouldn't be worthless, but the price of creation would be zero or near-zero.

--JanneJalkanen, 01-Nov-2006


You're right on distributors. Then again, it's not only P2P that is freaking out distributors, it's everything digital. If I were a big music (cd) distributor, I would think long and hard if I want to be in the business of logistics for physical goods (ditch music cds, find a new product), or in the music business (ditch warehouses and trucks, become like IODA, Orchard, etc).

I actually forgot to point out that at least in music the distributors do not own copyrights. There are record companies that ask you to sign away your copyrights, more in America than in Europe, but no one in their right mind does that. Then again, if you're on the verge of popularity and you're offered millions, you might not be in your right mind at all... But mostly artists license parts of their copyrights to various companies in the music business in hopes of greater returns on the value of the copyright. It's always a choice...

--Niko, 02-Nov-2006



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