I will come clean straightaway: I have not read this book. I have not yet received a review copy, and there was another good reason not to read the book, which is called 'Free' by Chris Anderson (subtitled “The Future of a Radical Price: The Economics of Abundance and Why Zero Pricing Is Changing the Face of Business”): it would have cost me £10.79 plus postage and packaging.
As if that wasn’t bad enough, on Amazon UK you can’t even peek inside the book: for that, you have to go to the USA Amazon site. Not an insurmountable problem, perhaps, but slightly niggling.
So, off to Google, and the first search for the book leads to a Scribd resource about it. This looks promising – for the nanosecond I’m permitted to look at it before this message appears:
Sorry, what was the title of the book again?
I looked inside the book on the Amazon USA site, but I was unable to copy and paste from it; perhaps that has something to do with the message emblazoned at the top of every page: “Copyrighted material”.
Now, to be fair, as far as I can gather the focus of the book is on the digital economy rather than the ‘real’ one. And the ‘argument’, if I can dignify it as such, is that over time the cost of digital items tends to zero.
Really? I haven’t noticed my costs becoming close to zero. To do my job, I have to spend time, which has an opportunity cost, researching things online, and time and money going on courses and conferences. I also found that trying to live on air just didn’t work for me. Funny that.
There is an absolutely huge article about the book by Anderson, on the website of Wired Magazine, which Anderson edits. I suppose I am starting to sound picky and tetchy, but the issue here is that presumably Anderson had to exert zero effort to have this article published, and pay nothing for what is, in effect, a free advertisement for his (then) forthcoming book, meaning that the cost of doing so was zero. But that has nothing to do with seismic shifts in economic paradigms, but in Anderson’s unique position of editor. I'm not saying that's wrong, just musing that perhaps the cost of things is also mixed up with your "social power", if I may put it like that.
In the article, he asserts that:
“the trend lines that determine the cost of doing business online all point the same way: to zero.”
That’s a ridiculous statement. Even apart from the opportunity cost of time, already mentioned, I have to pay for my domain names and webhosting – unless I want to have a website with a URL like http://www.cheapwebsitesareus.com/terryfreedman, and festooned with advertisements. I suppose I could decide to run my own web server, but then I’d have to pay for technical support, not least because I don’t have the time to deal with all that. Know any technicians who work for nothing?
There’s an interesting ‘taxonomy’ (Anderson’s term) of free, in which half a dozen manifestations of free are discussed. OK, I’ll grant that some of the principles make sense, such as making something free at the point of consumption and having it paid for by advertising (if you’re lucky), or giving stuff away for nothing as a kind of hook to reel people in to buy the premium version.
But Anderson keeps coming out with blanket statements like:
“In the monetary economy it all looks free — indeed, in the monetary economy it looks like unfair competition — but that says more about our shortsighted ways of measuring value than it does about the worth of what's created.”
It looks to me like Anderson has dipped into a book on economics and not understood it. He says:
“Read your college textbook and it's likely to define economics as "the social science of choice under scarcity." The entire field is built on studying trade-offs and how they're made. Milton Friedman himself reminded us time and time again that "there's no such thing as a free lunch.” But Friedman was wrong in two ways. First, a free lunch doesn't necessarily mean the food is being given away or that you'll pay for it later — it could just mean someone else is picking up the tab. Second, in the digital realm, as we've seen, the main feedstocks of the information economy — storage, processing power, and bandwidth — are getting cheaper by the day. Two of the main scarcity functions of traditional economics — the marginal costs of manufacturing and distribution — are rushing headlong to zip. It's as if the restaurant suddenly didn't have to pay any food or labor costs for that lunch.”
Even if you accept the assertion (I don’t see any hard evidence) that “Two of the main scarcity functions of traditional economics — the marginal costs of manufacturing and distribution — are rushing headlong to zip”, it’s irrelevant anyway because ‘scarcity’ comes about because of opportunity cost, defined as “the next best thing foregone”. There will always be something else you could have had or done, regardless of the monetary costs involved.
In any case, how does someone else paying for your lunch make the lunch free? All that’s happened is that the burden of payment has been shifted to someone else. Isn’t that what happens in shoplifting? The shoplifter gets the stuff free, and the rest of us pay for it through prices that are higher than they otherwise would have been. That doesn’t make the goods free.
Bizarrely, Anderson goes on to say that:
“There is, presumably, a limited supply of reputation and attention in the world at any point in time.”
A limited supply of reputation? What on earth does that mean?
As a general observation, I’ve noticed that the people who argue that the cost of everything digital is zero, and therefore should be priced as such, do not themselves fail to charge for their services. Experts who believe that knowledge on the internet should be free do not adopt the same ‘economic model’ in their daily working lives, in which they charge for disseminating their knowledge, or are employed to do the work in question.
I said right at the start of this non-review that I haven’t read the book, so you’d be insane to take my word for any of this. I suggest you read the article I mentioned, to get the full thrust of Anderson’s arguments. They’re quite persuasive in a strange sort of way, until you start to think critically about it all.
Then listen to Paula B’s review of the book over at her Writing Show website. That will help to bring you back to the real world.
And if you’re feeling really radical, read the book.