Unless you’ve been hiding under a rock, you already know about the dust-up between Malcolm Gladwell, Chris Anderson and Seth Godin…
Anderson’s book, FREE, came out a few weeks back, arguing in part that the distribution costs of any intellectual property that can be boiled down to digital format, be it a song, a book, a video or a game, have become so low that you should essentially round down to zero and accept that if you don’t make it available for free, someone else will.
So, rather than fight it, just suck it up and give it all away.
Then, Malcolm Gladwell mounted a frontal attack against the fundamental premise, showing how the major examples cited by Anderson can just as easily be deemed massive failures. At least, to date. And, he pointed to Youtube’s anticipated $500 million loss over the next year and need to pay hundreds of millions to license content to give away for free in order to have something decent enough to attract advertisers as proof that “if it’s digital, it must be free” is not a working business model.
Soonafter, Seth Godin chimed in with a post entitled Malcolm is wrong, backing up Chris and arguing “enough with the arguing,” free is here to stay, it’s the way it is. So, you can argue all you want, but in the meantime, recordings of your argument are being posted all over the web for people to engage with…for free.
Chris, Malcom and Seth are all people who I respect immensely and often read with my head nodding happily along.
But, this time, I have to admit to hoping the Free Brigade have got it wrong, really, really wrong at least as it pertains to scaling itty bitty businesses and creative geniuses who want a life outside of performing.
Because if the Free Brigade are right, if we who create information, performances, music, writings, recordings and any other electronic “commoditized” form of our work are required to give our creations away whenever they appear in digital form, that effectively shuts down one of the most powerful and lucrative ways to scale a small business built around creative or strategic output.
What the hell does that mean?
Okay, let’s say we have Ed the marketer. Ed makes a good chunk of his income working with private clients. But, he’s also only one guy and he needs to generate considerably more to support his family. He could hire a bunch of employees, but that means added overhead, complexity and oversight and that would add so many new processes he despises, it’d turn the job he loves into a mechanical money beast that generates more cash, but empties his soul and leaves his kids wondering who their father is…and why he’s always so pissed off on the rare occasions they do see him.
So, instead, he takes a different path and decides to scale his business by commodotizing his knowledge then distributing it on a mass level at a price that’s a fraction of his private consulting fees. He offers streaming videos, CDs, DVDs, mp3s, ebooks, webcasts and teleseminars.
In doing so, Ed is able to scale his income without adding substantially more oversight and complexity and the market of people who want to work with Ed but can’t afford his private fees are thrilled to benefit from his knowledge at a fraction of the price of a private retainer.
But, if the Free Brigade are right, then Ed’s world is about to come crashing down.
According to Chris and Seth, any time Ed tries to commoditize his knowledge, creative process or intellectual property and distribute it online, he should accept that it’ll end up on bit-torrent faster than he’ll be able to say “I lose” and suck up the fact that nobody’s going to pay for what they can download for free.
Even knowing this, though, Ed should continue to take time away from his paying clients and pour his heart and soul into creating and distributing this content, because it’ll act as great “freemium” marketing for his private, face-to-face services.
But, there’s a problem. Now that he’s lost the 30-50% of his income that was being generated by selling digital versions of his work, he’ll need to either:
(a) double his fees to make up the difference, which would have the effect of either pricing him out of business or making his services available to only the wealthiest of clients and likely eliminating a ton of people he’d love to work with and who desperately need his help,
(b) hire a bunch of employees or contractors and scale his business in the very way that turns what he loves to do into a big fat heap of “my dream career just turned into a suck-ass job that I wish I never started” or
(c) Deal with the fact that he can’t make enough to support his family any more, move to a smaller house, live more modestly and get comfortable with the fact that his master plan has just become his master.
So, if we are to accept that digital now means free (not freemium or some-free/some-paid), we’d also need to bury the single most effective simplicity-driven way to scale a passion-driven small-business or professional practice.
And, Seth and Chris may just be right. This may in fact be the emerging new reality.
As Seth wrote, “Who cares if we want it? It is.”
But, I hope not. Because I’m not all that fond of a world where bands need to accept that a solid chunk of the financial upside of their passion has largely evaporated since they now must give away their mp3’s, dvds and CDs as marketing “freemiums” and be relegated to touring until they’re 70 or charging $500 a ticket to make up for a complete loss of music sales.
Because I want to be able to share years of killer small business modeling, messaging and marketing ideas with thousands of clients through books, videos, seminars and info-products at a small-fraction of the price I’d charge for private consulting fees.
Because it’ll help them and it’ll allow me to earn enough to live well in the world, scale my business and my output in a way that preserves the simplicity I hold dear, continue to do what I love and carve out plenty of time to dance around my living room with my wife and little girl.
Sure, I’ll give some of it away to help market, to build my community. But all of it?!
Seth’s answer to this is…
People will pay for content if it is so unique they can’t get it anywhere else, so fast they benefit from getting it before anyone else, or so related to their tribe that paying for it brings them closer to other people. We’ll always be willing to pay for souvenirs of news, as well, things to go on a shelf or badges of honor to share.
And, here, I come back into the Seth-fold.
But, in carving out content that’s highly-unique, delivered really fast, or tribally-driven from the need to be free, I wonder if Godin has just left the Anderson’s camp, because, as Malcolm writes:
To musicians who believe that their music is being pirated, Anderson is blunt. They should stop complaining, and capitalize on the added exposure that piracy provides by making money through touring, merchandise sales, and “yes, the sale of some of [their] music to people who still want CDs or prefer to buy their music online.”
Anderson talks, in the book, about a Brazilian band who happily allows local DJs and street vendors to dupe their CDs and sell them for 75 cents without giving the band a cut, because that primes the local market and serves as a free advance team that packs the bands concerts when they come to town.
A band with great, original music seems to be just the thing Godin would carve out from the “everything digital will be free” model. It’s unique, it’s instant delivery and it’s tribal. But, Anderson puts it front and center as a prime example of the model at work.
And, indeed, it does work well for a band who loves nothing more than touring.
But, what if the only thing you’re more passionate about than playing great music with people you’ve known since third grade is being a strongly present, involved dad for your kid, knowing that only 5 short years from now she’ll be begging you to drop her at the corner three blocks from school so as not to embarrass her in front of her friends?
What if you don’t want to trash your personal relationships the way so many traveling musicians and artists do, in the name of earning enough to live well in the world? What if you love the studio, but hate the stage?
Here’s where Seth seems to provide an out, but Chris says “go free or go home.”
So, I wonder, when you add in Seth’s carve-outs, do he and Anderson really still agree…kinda agree…or not?
The more I think about it, the farther apart they get.
In the end, I don’t know who wins the free debate. And, at this point, I’m not even sure who’s on what side anymore?
But, though I usually agree with Seth, I know that when he writes:
The first argument that makes no sense is, “should we want free to be the future?”
Who cares if we want it? It is.
The second argument that makes no sense is, “how will this new business model support the world as we know it today?”
Who cares if it does? It is. It’s happening. The world will change around it, because the world has no choice. I’m sorry if that’s inconvenient, but it’s true.
Because for solopreneurs, professionals, small business owners and local, passion-driven content-creators, performers and solution providers who are trying to put food on the table for their families and build their livings around what and who make them come alive…it’s more than just “inconvenient” if digital scaling goes bye-bye as a source of revenue.
Curious, what do you think?
What’d I miss (Lord knows Chris, Malcolm and Seth are way smarter than me)?