6 ms·

Malcolm Gladwell: Is free the future?

83 points by nevan 17y ago

dantheman 17y ago
I remember reading that the YouTube bandwidth costs cited in this article were way out of wack and beard no semblance to reality. Has anyone seen any updates on those figures? Are they, in fact, correct?
- akamaka 17y ago
  My figures: 100.5 million unique viewers in Oct 2008. Average of 53.5 views per user that month. (source: http://www.businessinsider.com/2008/12/youtube-hits-100-million-viewers-hulu-surges http://www.businessinsider.com/2008/12/youtube-hits-100-mill...) Average video size, 10mb. 100.5m * 53.5 * 10 / 1024 = 52m GB served. At a generous price of 5 cents a gigabyte, that works out to about $2.5 million a month, or $31.5 million in 2008.
  - jussij 17y ago
    IMHO Youtube is doing nothing more than buring money. Eventually the money will run out and the flame will die.
  - jonknee 17y ago
    That doesn't factor in peering, Google is in a ton of data centers and almost every major ISP peers with them (they'd be stupid not to with all the outgoing traffic going to them). Either way the Credit Suisse estimate was way off.
nimbix 17y ago
If free is the future, why does Chris Anderson's book titled "Free" still cost $26.99? Considering the whole book is about making money by giving things away, I'm surprised he hasn't figured it out how to do this with his own book. Also, I believe that the power of FREE is not about money. It's about avoiding the hassle of paying. It doesn't matter whether you're paying 10 dollars or 1 cent - the hassle factor is about the same in both cases. This makes a free product more than 1 cent cheaper than a 1 cent product.
- robryan 17y ago
  I was wondering the same thing about the book price, it goes against what he is saying because the book is in his idea/ information type category. I think if more of the net unified with a single payments company which was accepted just about everywhere, had low fees and as many ways to transfer money into and out of as possible.
  - diN0bot 17y ago
    do you envision a better paypal or something different?
    - robryan 17y ago
      A paypal that is even more widely accepted, on such a large scale that it can offer smaller fees and a more wide range of ways to transfer money in and out.
      - diN0bot 17y ago
        hmmm. so more like credit in the sense of credit cards. i wonder what the fee comparison is between paypal (3% ?) and accepting credit cards (certainly seems more of a hassle for developers).
- sonofjanoh 17y ago
  If the publisher gets the $26.99 that makes the book free from the author's point of view although I really doubt that Chris Anderson is not getting his share.
- tetha 17y ago
  The book is about things being free in the digital domain, so in the internet. Thus, a physical copy of the book is still allowed to cost some money, as the paper just does cost money. However, a good question would be: where is the free ebook?
  - 17y ago
cschwarm 17y ago
Here's a counter model for newspapers (and the media industry, in general) to free: Start a club and grant access to (full online) texts to club members, only. Keep a fixed percentage of the revenue for administration. Say, 30 or 40 percent. This is where your profit comes from. Spend the rest of the money for people creating the value: reporters, journalists, photographers, or even club members. Start with a fixed budget for a year and an initial membership price. If revenue (fee * members) exceeds the budget, send a refund to members or raise the budget for the next year. If it doesn't, stop the club or raise the membership fee for next year. You may let members vote on that issue. Let people follow (as exemplified by Twitter) the journalists they want to read. Journalists followed by many are obviously popular, and thus valuable. In other words: Make them celebrities, to some degree. Inform club members about new pieces of the journalists they follow by mail or SMS. Provide an interface for members that resembles a feed reader: A member only gets to see information from journalists he or she follows. Let members vote on articles. Create an incentive to journalists to advertise their commitment to a certain club. For example, make a part of their payment depend on the numbers of followers they have. You may also allow them to employ other journalists (or ghost-writers). Then, they may utilize their blogs and appearances in other media to point to 'their' club. They could engage with their reader community (by answering comment discussions, for example). In other words: Your sales pitch is not about the news you provide, anymore, but the access you provide to (popular) journalists. You may also let members follow other members and show only comments made by them (or notify about new comments). Invite members with lots of followers to write articles. This creates an incentive to members to write good comments. You may also increase to incentive to be a club member by letting people become members by invitation, only. Being a "Wall Street Journal Club Member", for example, could mean something. If you provide a page for each member, they may use it on their usual web presence (LinkedIn, etc.) Offer some free content on the site; for example, general news, introductions to popular articles, outdated articles, or comments (or discussions by your journalists. Make is SEO-friendly so people can link to it and Google can pick it up. You could use advertising to finance the free part. This has the following effect: Firstly, they have an incentive to advertise the club: the more people participate, the more value they get (or the less they will have to spend). Secondly, there's an incentive for readers to withhold more valuable information to others (instead of spreading them and making money with Google Adwords). They are also less likely to spread their account information to others. In other words: Create a mix of Digg, Twitter and Feed Readers and add a stronger incentive to keep information private. Or course, that's just a quick summery. Comments welcome.
pclark 17y ago
I don't get it. stuff isn't free. Take news. You make the content free to consumers then sell something of value to businesses. You mask a B2B operation with a B2C front. Whats of value? Aggregate reading data for news aggregators, personalised advertising slots, some new crazy business model companies will pay for data.
mooism2 17y ago
The point isn't really that everything will be free. The point is that lots of informational products will have a free option --- and that there will be pay versions too. The future is differential pricing.
mildweed 17y ago
Did Malcolm just invoke Moore's law to explain how newspapers should be priced?!? That's as relevant a Goodwin's.
johnohara 17y ago
The Chicago Tribune has an estimated 541,000 daily readers. 898,000 on Sunday. Let's use the daily number to stay on the conservative side. Daily newsstand price is $1.00. $1.00 x 541,000 x 365 = $197,465,000 What percent of that number does it take to bring all those ideas (including stories, columns, ads and obits) to market? Let's say 85%. That's $167,845,250. $197,465,000 - $167,845,250 = $29,619,750 Now make everything digital. Sell the trucks and presses, layoff all production and delivery personnel. Hire only digital content creators and use the Amazon Kindle. Annual subscription per reader: $54.75 At 70/30, the Amazon Kindle subscription would have to be $182.50 not the $120.00 cited in the article. I'm not including revenue from advertising (which may not translate well on the Kindle) but if you owned the Chicago Tribune or The Dallas Morning News would you agree to the terms?
- sethg 17y ago
  Subscribers pay much less than the newsstand price, and you can haggle down from the advertised subscription price as well, so I think your estimates are way off. The factoid I remember, although I can't cite a source offhand, is that the cost of printing and delivering a daily newspaper is just about equal to the cost that the consumer pays, and the rest of the newspaper's income is coming from advertising. If ebook readers were more widely used then it might be practical to run a newspaper by selling an online-only edition (perhaps making everything free on the Web after a 48-hour delay), but I'm not sure we're there yet. Also, I suspect that the first publisher to offer news in this way will be some upstart who is not encumbered by the sunk costs and contractual obligations surrounding a paper-and-ink newspaper.
  - ShabbyDoo 17y ago
    When I read about the proposed 70/30 split, I thought that it was quite generous of Amazon! Let's presume that the cost of printing and delivery is equal to current subscription revenue. Amazon just gave the newspapers a huge increase in profitability (presuming everyone switched to a Kindle tomorrow). My sister-in-law is the business manager for a magazine with 250K subscribers. Their printing/distro costs exceed the average subscription price, so they'd be overjoyed if they could strike such a deal with Amazon and get their subscribers to convert over (unlikely).
socratees 17y ago
I doubt the model of online advertisement as the model of the future. Also, I have not clicked on any facebook ads, linkedin ads, or ads on google mail as long as i can remember. The only time i click the ads is when I'm actively searching for a product on Google. Do you click on ads just for the sake of it?
- barrkel 17y ago
  Be wary of generalizing from a sample size of 1, or from peculiar audiences, such as those on hacker / startup-oriented social news sites. I, for one, have observed surprisingly compulsive reactions to advertising in some of the people around me, things I'd never do just on principle of being bidden by an ad. You'd be surprised.
- va_coder 17y ago
  I've watched over a thousand truck ads on tv and never considering buying one. That doesn't mean the ads don't work.
mattmaroon 17y ago
One could spend a lot of time writing about how worthless Chris Anderson books are. The number of startups based on his Long Tail theory, which is proving almost totally fallacious, and in fact comes from a very inaccurate data set, is staggering. At least with this book, people have already been building startups around the theory for 10 years.
va_coder 17y ago
I think Gladwell and Anderson are both right. Anderson is right that many products that once cost money will now be free. Gladwell is right that many more products will never be free for many reasons, and one good reason is there are hidden costs that make it impossible for someone to provide the product for free.
10ren 17y ago
If history is written by the victors, who will benefit by writing news for free?
- pg 17y ago
  My first thought was, alarmingly, lobbyists.
Tangurena 17y ago
I'm disappointed by Gladwell misinterpreting Lewis Strauss' remarks. When Strauss claimed that electrical energy [will be] too cheap to meter, he was talking about subsidizing plutonium production. Originally, the feds needed plutonium for nuclear weapon production, and they were paying about $1,000,000 per kilo of privately produced plutonium. At those prices, the sales of plutonium would cover the price of building and operating a plant, and the electricity would be a free by-product. When the feds quit purchasing plutonium in the early 1970s, it destroyed the economic model for building and operating nuclear power plants. Not the meltdown at three mile island, nor tree hugging lawyers. Please read The Curve of Binding Energy for more details. http://www.amazon.com/Curve-Binding-Energy-Alarming-Theodore/dp/0374515980 http://www.amazon.com/Curve-Binding-Energy-Alarming-Theodore...
10ren 17y ago
The slashdot story points out that "information wants to be free" is a misrepresentative subquote. An alternative misrepresentation is "information wants to be expensive". http://en.wikipedia.org/wiki/Information_wants_to_be_free#History http://en.wikipedia.org/wiki/Information_wants_to_be_free#Hi...

83 points by nevan 17y ago

I remember reading that the YouTube bandwidth costs cited in this article were way out of wack and beard no semblance to reality. Has anyone seen any updates on those figures? Are they, in fact, correct?

akamaka 17y ago
My figures: 100.5 million unique viewers in Oct 2008. Average of 53.5 views per user that month. (source: http://www.businessinsider.com/2008/12/youtube-hits-100-million-viewers-hulu-surges http://www.businessinsider.com/2008/12/youtube-hits-100-mill...) Average video size, 10mb. 100.5m * 53.5 * 10 / 1024 = 52m GB served. At a generous price of 5 cents a gigabyte, that works out to about $2.5 million a month, or $31.5 million in 2008.
- jussij 17y ago
  IMHO Youtube is doing nothing more than buring money. Eventually the money will run out and the flame will die.
- jonknee 17y ago
  That doesn't factor in peering, Google is in a ton of data centers and almost every major ISP peers with them (they'd be stupid not to with all the outgoing traffic going to them). Either way the Credit Suisse estimate was way off.

nimbix 17y ago

If free is the future, why does Chris Anderson's book titled "Free" still cost $26.99? Considering the whole book is about making money by giving things away, I'm surprised he hasn't figured it out how to do this with his own book. Also, I believe that the power of FREE is not about money. It's about avoiding the hassle of paying. It doesn't matter whether you're paying 10 dollars or 1 cent - the hassle factor is about the same in both cases. This makes a free product more than 1 cent cheaper than a 1 cent product.

robryan 17y ago
I was wondering the same thing about the book price, it goes against what he is saying because the book is in his idea/ information type category. I think if more of the net unified with a single payments company which was accepted just about everywhere, had low fees and as many ways to transfer money into and out of as possible.
- diN0bot 17y ago
  do you envision a better paypal or something different?
  - robryan 17y ago
    A paypal that is even more widely accepted, on such a large scale that it can offer smaller fees and a more wide range of ways to transfer money in and out.
    - diN0bot 17y ago
      hmmm. so more like credit in the sense of credit cards. i wonder what the fee comparison is between paypal (3% ?) and accepting credit cards (certainly seems more of a hassle for developers).
sonofjanoh 17y ago
If the publisher gets the $26.99 that makes the book free from the author's point of view although I really doubt that Chris Anderson is not getting his share.
tetha 17y ago
The book is about things being free in the digital domain, so in the internet. Thus, a physical copy of the book is still allowed to cost some money, as the paper just does cost money. However, a good question would be: where is the free ebook?
- 17y ago

cschwarm 17y ago

Here's a counter model for newspapers (and the media industry, in general) to free: Start a club and grant access to (full online) texts to club members, only. Keep a fixed percentage of the revenue for administration. Say, 30 or 40 percent. This is where your profit comes from. Spend the rest of the money for people creating the value: reporters, journalists, photographers, or even club members. Start with a fixed budget for a year and an initial membership price. If revenue (fee * members) exceeds the budget, send a refund to members or raise the budget for the next year. If it doesn't, stop the club or raise the membership fee for next year. You may let members vote on that issue. Let people follow (as exemplified by Twitter) the journalists they want to read. Journalists followed by many are obviously popular, and thus valuable. In other words: Make them celebrities, to some degree. Inform club members about new pieces of the journalists they follow by mail or SMS. Provide an interface for members that resembles a feed reader: A member only gets to see information from journalists he or she follows. Let members vote on articles. Create an incentive to journalists to advertise their commitment to a certain club. For example, make a part of their payment depend on the numbers of followers they have. You may also allow them to employ other journalists (or ghost-writers). Then, they may utilize their blogs and appearances in other media to point to 'their' club. They could engage with their reader community (by answering comment discussions, for example). In other words: Your sales pitch is not about the news you provide, anymore, but the access you provide to (popular) journalists. You may also let members follow other members and show only comments made by them (or notify about new comments). Invite members with lots of followers to write articles. This creates an incentive to members to write good comments. You may also increase to incentive to be a club member by letting people become members by invitation, only. Being a "Wall Street Journal Club Member", for example, could mean something. If you provide a page for each member, they may use it on their usual web presence (LinkedIn, etc.) Offer some free content on the site; for example, general news, introductions to popular articles, outdated articles, or comments (or discussions by your journalists. Make is SEO-friendly so people can link to it and Google can pick it up. You could use advertising to finance the free part. This has the following effect: Firstly, they have an incentive to advertise the club: the more people participate, the more value they get (or the less they will have to spend). Secondly, there's an incentive for readers to withhold more valuable information to others (instead of spreading them and making money with Google Adwords). They are also less likely to spread their account information to others. In other words: Create a mix of Digg, Twitter and Feed Readers and add a stronger incentive to keep information private. Or course, that's just a quick summery. Comments welcome.

pclark 17y ago

I don't get it. stuff isn't free. Take news. You make the content free to consumers then sell something of value to businesses. You mask a B2B operation with a B2C front. Whats of value? Aggregate reading data for news aggregators, personalised advertising slots, some new crazy business model companies will pay for data.

mooism2 17y ago

The point isn't really that everything will be free. The point is that lots of informational products will have a free option --- and that there will be pay versions too. The future is differential pricing.

mildweed 17y ago

Did Malcolm just invoke Moore's law to explain how newspapers should be priced?!? That's as relevant a Goodwin's.

johnohara 17y ago

The Chicago Tribune has an estimated 541,000 daily readers. 898,000 on Sunday. Let's use the daily number to stay on the conservative side. Daily newsstand price is $1.00. $1.00 x 541,000 x 365 = $197,465,000 What percent of that number does it take to bring all those ideas (including stories, columns, ads and obits) to market? Let's say 85%. That's $167,845,250. $197,465,000 - $167,845,250 = $29,619,750 Now make everything digital. Sell the trucks and presses, layoff all production and delivery personnel. Hire only digital content creators and use the Amazon Kindle. Annual subscription per reader: $54.75 At 70/30, the Amazon Kindle subscription would have to be $182.50 not the $120.00 cited in the article. I'm not including revenue from advertising (which may not translate well on the Kindle) but if you owned the Chicago Tribune or The Dallas Morning News would you agree to the terms?

sethg 17y ago
Subscribers pay much less than the newsstand price, and you can haggle down from the advertised subscription price as well, so I think your estimates are way off. The factoid I remember, although I can't cite a source offhand, is that the cost of printing and delivering a daily newspaper is just about equal to the cost that the consumer pays, and the rest of the newspaper's income is coming from advertising. If ebook readers were more widely used then it might be practical to run a newspaper by selling an online-only edition (perhaps making everything free on the Web after a 48-hour delay), but I'm not sure we're there yet. Also, I suspect that the first publisher to offer news in this way will be some upstart who is not encumbered by the sunk costs and contractual obligations surrounding a paper-and-ink newspaper.
- ShabbyDoo 17y ago
  When I read about the proposed 70/30 split, I thought that it was quite generous of Amazon! Let's presume that the cost of printing and delivery is equal to current subscription revenue. Amazon just gave the newspapers a huge increase in profitability (presuming everyone switched to a Kindle tomorrow). My sister-in-law is the business manager for a magazine with 250K subscribers. Their printing/distro costs exceed the average subscription price, so they'd be overjoyed if they could strike such a deal with Amazon and get their subscribers to convert over (unlikely).

socratees 17y ago

I doubt the model of online advertisement as the model of the future. Also, I have not clicked on any facebook ads, linkedin ads, or ads on google mail as long as i can remember. The only time i click the ads is when I'm actively searching for a product on Google. Do you click on ads just for the sake of it?

barrkel 17y ago
Be wary of generalizing from a sample size of 1, or from peculiar audiences, such as those on hacker / startup-oriented social news sites. I, for one, have observed surprisingly compulsive reactions to advertising in some of the people around me, things I'd never do just on principle of being bidden by an ad. You'd be surprised.
va_coder 17y ago
I've watched over a thousand truck ads on tv and never considering buying one. That doesn't mean the ads don't work.

mattmaroon 17y ago

One could spend a lot of time writing about how worthless Chris Anderson books are. The number of startups based on his Long Tail theory, which is proving almost totally fallacious, and in fact comes from a very inaccurate data set, is staggering. At least with this book, people have already been building startups around the theory for 10 years.

va_coder 17y ago

I think Gladwell and Anderson are both right. Anderson is right that many products that once cost money will now be free. Gladwell is right that many more products will never be free for many reasons, and one good reason is there are hidden costs that make it impossible for someone to provide the product for free.

10ren 17y ago

If history is written by the victors, who will benefit by writing news for free?

pg 17y ago
My first thought was, alarmingly, lobbyists.

Tangurena 17y ago

I'm disappointed by Gladwell misinterpreting Lewis Strauss' remarks. When Strauss claimed that electrical energy [will be] too cheap to meter, he was talking about subsidizing plutonium production. Originally, the feds needed plutonium for nuclear weapon production, and they were paying about $1,000,000 per kilo of privately produced plutonium. At those prices, the sales of plutonium would cover the price of building and operating a plant, and the electricity would be a free by-product. When the feds quit purchasing plutonium in the early 1970s, it destroyed the economic model for building and operating nuclear power plants. Not the meltdown at three mile island, nor tree hugging lawyers. Please read The Curve of Binding Energy for more details. http://www.amazon.com/Curve-Binding-Energy-Alarming-Theodore/dp/0374515980 http://www.amazon.com/Curve-Binding-Energy-Alarming-Theodore...

10ren 17y ago

The slashdot story points out that "information wants to be free" is a misrepresentative subquote. An alternative misrepresentation is "information wants to be expensive". http://en.wikipedia.org/wiki/Information_wants_to_be_free#History http://en.wikipedia.org/wiki/Information_wants_to_be_free#Hi...