Two recent blog posts on the subject of "free" have recently received much attention: Better than Free by Kevin Kelly and Free! Why $0.00 is the Future of Business by Chris Anderson. Both are works in advance of upcoming books by the respective writers. The two articles examine the concept of free in different ways: Kelly by looking at value propositions and Anderson, who looks at business models. Both posts have generated a myriad of comments and commentary in other posts.
The basic premise of both articles is that anything that touches the web gets pulled into an inexorable cycle that brings its cost to consumers to, essentially (if not actually), free. This is driven both by decreasing unit costs of technology and psychological behaviors of consumers that show "free" is a whole different ball game than "low-cost". One recent study demonstrates that to consumers, "free" equals a perceived higher benefit. Whether this is actually the case or not in the long run when trade offs are accounted for is besides the point. At the point of sale (maybe we should say, point of decision) free is irresistibly attractive.
Kelly's article offers eight attributes of things you can sell, which cannot be copied, his formula for success. He calls them "generative values" (more on that in a moment). Anderson offers six categories of the "priceless economy." Together, the articles offer an interesting roadmap for people seeking to make money online in an environment where the pressures point to free. And yet, there is a problem, which commenters brought up in both cases (and Kelly addresses in a later post): while "free" is good for consumers, and large companies flush with cash, it isn't so good for unfunded companies or for the creators in the long tail, who are trying to make a living. In fact, this problem may actively destroy innovation, as people accept products and services that are "good enough" and free vs. paying for something better. More optimistic people see this process and call it a cycle, where truly innovative ideas will eventually rise to the top again as people get tired of mediocrity.
The angle I want to think from for these two articles is scarcity vs. abundance and their relative values. I think there are underlying problems around these issues in both articles. In traditional economics scarcity = value. The rise of the digital world and the pressures towards free have led, in part, to economists starting to think about economies of abundance. Kelly is one writer who has been trying to think about this for quite some time. The key question here is how can something be abundant, yet still valuable? Or, to put it another way, can you have an abundance of uniqueness, with "unique" keeping its value (which we have usually thought of as coming from its scarcity)? We will get to that question in a bit. First, let's look at scarcity.
Anderson writes,
"There is, presumably, a limited supply of reputation and attention in the world at any point in time. These are the new scarcities -- that the world of free exists mostly to acquire these valuable assets for the sake of a business model to be identified later."
I find the disclaimer, "presumably" very interesting here. It questions whether, in fact, there truly is a "limited supply" of reputation or attention. Is there really a static pool of reputation in the world that we apportion out in different "slices of pie"? It seems a bit foolish when you think about it that way. In a globalizing world, the pie keeps getting bigger. And given how difficult it is to really define and measure reputation today, I'd hesitate to make any type of categorical assertion about the amount of reputation in the world. So let's assume, rather than it being limited, that, at the moment, it is unknown, even, if not limitless in the end, far more available than Anderson supposes (even with his disclaimer). That brings us to attention. In this case, he has a stronger argument. Clearly, each individual human has only a certain amount of attention, as he/she has only a certain number of hours in the day. Time is the limiting factor here. And certainly demands on our attention seem to increase every day. Yet, at the same time, there are more and more technologies that enable us to better manage what we actually pay attention to (RSS feeds, recommendation engines, friend recommendations, etc.) For the lucky ones who can afford to, they can hire people to help filter attention demands. Attention is perhaps a more limited factor, but, still, it seems to me that we can handle more and more demands moving forward. Where does this bring us, then, when we consider his six categories of the "priceless economy"?: Freemium, Advertising, Cross-subsidies, Zero marginal cost, Labor exchange, Gift economy?
Honestly, I am not completely sure. What if we consider reputation as abundantly available (with a lot of hard work) and attention more abundant than we have assumed (if bounded)? Does it even make sense to think about this in terms of "priceless economy" or do we need to broaden out the economy we are describing? Does it create another economy that falls between "free" (with all its hidden "costs") and "pay"? Maybe it has more to do with a sharing/barter/gift economy, and Anderson's last two categories actually need to be seriously rethought? (Much of what I have read about gift economies seems far too simplistic to me.)
This brings us back to Kelly's piece. I think his eight generative values have potential to help us think about abundance economies, which I think could revolve around affect. First, let's look at his term "generative values". He defines a generative value as:
"a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing cannot be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold."
As I often like to do, I went back to the dictionary to think about "generative" and "value". First the latter (I paraphrase): "an intrinsically desirable quality." By using the adjective "generative", Kelly is adding power, the power to "generate, originate, produce or reproduce." Later, he states that his definition does not include reproduction (in fact, is expressly contra reproduction, which is problematic given his choice of word implies reproduction from the beginning). Of course, generative is linked to generate, which has as its ancient root the Latin for descent or birth. What is interesting, is that there is another word that descends from the same Latin root, which Kelly introduces later in the piece: generous. Meaning "magnanimous or kindly", which nicely clicks with the theme of affect I alluded to above, it also means "liberal in giving" or "marked by abundance or ample proportions, copious." We are back to abundance, instead of scarcity! It is easy to get tripped up by Kelly's thought of generative values as unique, which in our common usage, means scarce. Yet, this assumption doesn't need to hold. To my thought, Kelly's argument is that uniqueness can be abundant and still retain its value. This "abundance of uniqueness" idea runs square against the "scarce is valuable" meme of traditional economics.
So what are Kelly's eight generative values? Immediacy, Personalization, Interpretation, Authenticity, Accessibility, Embodiment, Patronage, and Findability. As a reminder, Kelly is offering these things as values that, when attached to products and services, will promote people paying for those products and services, versus demanding them for free. What I'd like to do is take just a quick look at how affect underlies them, as I think this is a key need in a movement towards thinking the value of abundance.
Immediacy is defined by Kelly as "getting a copy delivered...the moment it is released, or even better, produced - by its creators." He offers beta copies of software as an example, and emphasizes how this brings fans into the "generative process itself." His follow up piece to this article, 1,000 True Fans, explains further how creators can work directly with fans to make a living. The affect that underlies immediacy is, for one, trust. Not the least of which is the trust that your mistakes will not destroy your reputation, but rather, your learning from them, your accepting advice from others, will enhance your reputation.
Personalization, remarks Kelly, "...requires an ongoing conversation between the creator and consumer..." the creation of a relationship. Trust and the twin gifts of time and attention are clearly important here.
Interpretation relies on "support and guidance", not necessarily given by the creator him or herself, but from somone who has invested their own time and effort to understand something, then wants to share that understanding with others (sharing being the key word here).
Authenticity is more problematic to me, as Kelly identifies it with digital watermarks and signature technology. It is proof that something is original/unique/rare. He ends his discussion, however with the words, "for those who care." I know, certainly, that there are many who do care, but I also question the assumption that copies are somehow "valueless" (more on that another time). I am not sure that there is true affect underlying this particular definition of authenticity. Of course, if you think about authenticity in other ways, as honesty or truthfulness in sharing, that obviously is something we desire in abundance.
Accessibility refers to having other manage our digital archives for us, for which we happily pay them. I am unsure this even belongs on Kelly's list as I suspect as digital management tools get better, we'll stop outsourcing this to humans. And there is no affect here, in the sense that I am looking for it.
Embodiment means that people will pay for the book itself, or to have a human come and talk to them in their office, for example. The first may be more of a generational/technology thing, but the second will remain important for far longer. Seeing, touching, feeling, smelling another human is an intrinsic part of the human experience. While virtual presence is a wonderful thing, it will always be worth the premium to have the actual person close to you -- at least until we all become posthuman.
Patronage, where "...audiences WANT to pay creators. Fans like to reward artists...with the tokens of their appreciation, because it allows them to connect." While we may not have the intrinsic talent to create something, we can feel part of creation by supporting it financially. This has a wide variety of underlying affective traits, some of which are even problematic from an aesthetic viewpoint (but I won't get into that now).
Findability leads Kelly to claim that "creators need aggregators...for the distribution of the users' attention back to the works." Like Accessibility above, a good portion of this problem can be solved in the long run by technology, but people passing along word of their likes and dislikes to friends, to their network, will remain a significant (and affective-ridden) portion of findability.
To reiterate: While Anderson relies (however tentatively) on a scarcity of reputation and attention, Kelly is trying to think about an economy of abundance, or generosity:
"...these new eight generatives demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can't be replicated with a click of the mouse."
Whether or not there are actually eight generative values, in terms of affect, Kelly's effort to describe how uniqueness can be abundant, and valuable, is a good step towards thinking about economies of abundance. I wonder if it would be useful, however, to start from how a generosity of affective traits might create value(s). In the way these eight values are written by Kelly, it almost seems like affect came after vs. before. For example, we could do a thought experiment where we considered what might be possible with an abundance of trust, or an abundance of attention devoted to a topic. At the very least, we need to more clearly define what an abundance of uniqueness might look like or how it could be defined in terms of value.
When it comes to thinking about scarcity and abundance, I think there remain problems that need to be thought through carefully, such as that concerning reproductions and copies. The problem is not a clear cut as Kelly glosses it. Furthermore, I think that if we think about generosity and affect much more directly than Kelly has done, we will probably uncover more generative values, or at the least more ideas about how to apply them. If we pursue the thinking of an abundance of uniqueness, in conjunction with thinking about gift economies that I proposed above, I suspect we'll discover a wealth of new ideas. I look forward to participating.
Elizabeth, fabulous work. Sets a new standard of thoughtfulness in the blogosphere. Thanks! Grant
Posted by: Grant McCracken | March 06, 2008 at 04:21 PM