free Here are two unrelated articles that make an interesting contrast, as both of them have to do with things being given away for free.

Giving It Away

First, Chris Anderson (best known for coming up with the �long tail� theory) has an article in the Wall Street Journal about �The Economics of Giving It Away.� Anderson makes the case that in the current economic downturn, making money by giving things away for free (subsidized by some users paying for premium content) is more attractive than ever.

Anderson points to such services as Pandora (to which I am listening right now in fact), Hulu, and Skype as examples of this practice. (On the e-book side, one could also point to Baen�s Free Library and bound-in CDs.)

But conversely, he also points out that trying to make a business out of �free� without figuring out how to monetize it is harder than ever. Twitter, Facebook, YouTube, and Digg are presented as examples of services that are having trouble making their income match their outlays.

Death of Copyright, Film at Eleven?

On the other side, we have a research paper from BitTorrent researcher Johan Pouwelse, who makes the somewhat sensational prediction that copyright could be �obsolete� by 2010. This article summarizes the arguments; here is the abstract and the full 21-page paper (PDF format). The paper is the result of years of research, and analyzes a number of different peer-to-peer systems to see what makes them tick.

Although the paper�s definition of �peer-to-peer� is a little wider than that most commonly used for the term (including such sites as Slashdot and Wikipedia as examples of peer-to-peer), when taken as a whole the analysis makes a good deal of sense. There may be a little bias in it, however, given that Pouwelse holds up Tribler�a peer-to-peer system with which he is heavily involved�as one of the most advanced peer-to-peer systems currently available.

Pouwelse believes that unless it is reformed, copyright law will be rendered irrelevant by 2010 by the combination of an Internet-using public that has grown used to disregarding copyright law and the ability of darknets�untraceably anonymous peer-to-peer networks�to offer files with a selection and performance comparable to today�s un-dark peer-to-peer. �No effective legal or technological method currently exits to stop darknets, with the exception of banning general-purpose computing.�

Possible reforms might include a �digital superdistribution right� to legalize the non-profit use of peer-to-peer with a royalty payment system and compulsory license. Pouwelse points out that �Many people agree that copyright reforms are needed and that the rights of the commons �to be included� should be restored.�

I am not sure to what extent I support the paper�s conclusions, but it does serve as a reminder of the turbulent times in which we are living. The economic recession can only increase the pressures and problems presented by peer-to-peer�producers feeling the pinch will be all the more upset at people �stealing� their works, and budget-conscious consumers will spending less and trying to get more for �free� than ever. If darknets finally come into their own as fully viable peer-to-peer networks, those pressures will get that much greater.

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TeleRead Editor Chris Meadows has been writing for us--except for a brief interruption--since 2006. Son of two librarians, he has worked on a third-party help line for Best Buy and holds degrees in computer science and communications. He clearly personifies TeleRead's motto: "For geeks who love books--and book-lovers who love gadgets." Chris lives in Indianapolis and is active in the gamer community.


  1. Of course the mostly-free model is probably only workable for those companies and sites working on a large scale. In a world where everyone expects to get almost everything for free, how can those working on a smaller scale hope to generate a smaller revenue stream? Many people are still willing offer their work up to the world for no financial reward, but this all seems to mean that there isn’t much of a chance for a “small business” in the online world unless that small business happens to be selling physical things.

  2. Free hardly seems like the only way to make money, and I wouldn’t say copyright is a failure by any means. Common sense would say:

    * Free can be an excellent marketing tool.

    * Artists such as Nine Inch Nails have demonstrated that the situation doesn’t have to be either/or. Let the customer decide how much they wish to pay, from free to infinity. (This is called “trusting your customers” and has been really out of fashion with publishers lately.)

    * The much-vaunted idea of the micropayment isn’t dead (i.e., “cheap as free”). (Note that flat-rate all-you-can-eat systems are essentially micropayment systems for the Collectors.) Most of the profit breakdowns we see around here fall apart in the face of volume.

    And there likely isn’t one solution. I see no reason why pricing can’t change throughout the lifetime of a work.

    Of course, if you develop a system in which people perceive no value, then people are also likely to lose respect. A valid response in that scenario would be to drastically reduce price, but I’m not sure there are many winners in this race to zero.

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