Nettime's avid reader on Wed, 6 Feb 2008 15:29:50 +0100 (CET)

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<nettime> Kevin Kelly: Better Than Free

Rasmus Fleischer wrote:

> The answers to the questions posed by the digital, can not be found
> within the digital. They are only to be found in the relation to what
> is *not* digital: Time. Space. Relationships between human beings.
> That's where digital copies may get a value.

Better Than Free
Kevin Kelly, 2.5.08

The internet is a copy machine. At its most foundational level, it copies 
every action, every character, every thought we make while we ride upon 
it. In order to send a message from one corner of the internet to another, 
the protocols of communication demand that the whole message be copied 
along the way several times. IT companies make a lot of money selling 
equipment that facilitates this ceaseless copying. Every bit of data ever 
produced on any computer is copied somewhere. The digital economy is thus 
run on a river of copies. Unlike the mass-produced reproductions of the 
machine age, these copies are not just cheap, they are free.

Our digital communication network has been engineered so that copies flow 
with as little friction as possible. Indeed, copies flow so freely we 
could think of the internet as a super-distribution system, where once a 
copy is introduced it will continue to flow through the network forever, 
much like electricity in a superconductive wire. We see evidence of this 
in real life. Once anything that can be copied is brought into contact 
with internet, it will be copied, and those copies never leave. Even a dog 
knows you can't erase something once its flowed on the internet.

This super-distribution system has become the foundation of our economy and 
wealth. The instant reduplication of data, ideas, and media underpins all 
the major economic sectors in our economy, particularly those involved 
with exports ??? that is, those industries where the US has a competitive 
advantage. Our wealth sits upon a very large device that copies 
promiscuously and constantly.

Yet the previous round of wealth in this economy was built on selling 
precious copies, so the free flow of free copies tends to undermine the 
established order. If reproductions of our best efforts are free, how can 
we keep going? To put it simply, how does one make money selling free 

I have an answer. The simplest way I can put it is thus:

When copies are super abundant, they become worthless.
When copies are super abundant, stuff which can't be copied becomes scarce 
and valuable.

When copies are free, you need to sell things which can not be copied.

Well, what can't be copied?

There are a number of qualities that can't be copied. Consider "trust." 
Trust cannot be copied. You can't purchase it. Trust must be earned, over 
time. It cannot be downloaded. Or faked. Or counterfeited (at least for 
long). If everything else is equal, you'll always prefer to deal with 
someone you can trust. So trust is an intangible that has increasing value 
in a copy saturated world.

There are a number of other qualities similar to trust that are difficult 
to copy, and thus become valuable in this network economy. I think the 
best way to examine them is not from the eye of the producer, 
manufacturer, or creator, but from the eye of the user. We can start with 
a simple user question: why would we ever pay for anything that we could 
get for free? When anyone buys a version of something they could get for 
free, what are they purchasing?

>From my study of the network economy I see roughly eight categories of 
intangible value that we buy when we pay for something that could be free.

In a real sense, these are eight things that are better than free. Eight 
uncopyable values. I call them "generatives." A generative value is a 
quality or attribute that must be generated, grown, cultivated, nurtured. 
A generative thing can not 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.

Eight Generatives Better Than Free

Immediacy ??? Sooner or later you can find a free copy of whatever you want, 
but getting a copy delivered to your inbox the moment it is released ??? or 
even better, produced ??? by its creators is a generative asset. Many people 
go to movie theaters to see films on the opening night, where they will 
pay a hefty price to see a film that later will be available for free, or 
almost free, via rental or download. Hardcover books command a premium for 
their immediacy, disguised as a harder cover. First in line often commands 
an extra price for the same good. As a sellable quality, immediacy has 
many levels, including access to beta versions. Fans are brought into the 
generative process itself. Beta versions are often de-valued because they 
are incomplete, but they also possess generative qualities that can be 
sold. Immediacy is a relative term, which is why it is generative. It has 
to fit with the product and the audience. A blog has a different sense of 
time than a movie, or a car. But immediacy can be found in any media.

Personalization ??? A generic version of a concert recording may be free, but 
if you want a copy that has been tweaked to sound perfect in your 
particular living room ??? as if it were preformed in your room ??? you may be 
willing to pay a lot. The free copy of a book can be custom edited by the 
publishers to reflect your own previous reading background. A free movie 
you buy may be cut to reflect the rating you desire (no violence, dirty 
language okay). Aspirin is free, but aspirin tailored to your DNA is very 
expensive. As many have noted, personalization requires an ongoing 
conversation between the creator and consumer, artist and fan, producer 
and user. It is deeply generative because it is iterative and time 
consuming. You can't copy the personalization that a relationship 
represents. Marketers call that "stickiness" because it means both sides 
of the relationship are stuck (invested) in this generative asset, and 
will be reluctant to switch and start over.

Interpretation ??? As the old joke goes: software, free. The manual, $10,000. 
But it's no joke. A couple of high profile companies, like Red Hat, 
Apache, and others make their living doing exactly that. They provide paid 
support for free software. The copy of code, being mere bits, is free ??? 
and becomes valuable to you only through the support and guidance. I 
suspect a lot of genetic information will go this route. Right now getting 
your copy of your DNA is very expensive, but soon it won't be. In fact, 
soon pharmaceutical companies will PAY you to get your genes sequence. So 
the copy of your sequence will be free, but the interpretation of what it 
means, what you can do about it, and how to use it ??? the manual for your 
genes so to speak ??? will be expensive.

Authenticity ??? You might be able to grab a key software application for 
free, but even if you don't need a manual, you might like to be sure it is 
bug free, reliable, and warranted. You'll pay for authenticity. There are 
nearly an infinite number of variations of the Grateful Dead jams around; 
buying an authentic version from the band itself will ensure you get the 
one you wanted. Or that it was indeed actually performed by the Dead. 
Artists have dealt with this problem for a long time. Graphic 
reproductions such as photographs and lithographs often come with the 
artist's stamp of authenticity ??? a signature ??? to raise the price of the 
copy. Digital watermarks and other signature technology will not work as 
copy-protection schemes (copies are super-conducting liquids, remember?) 
but they can serve up the generative quality of authenticity for those who 

Accessibility ??? Ownership often sucks. You have to keep your things tidy, 
up-to-date, and in the case of digital material, backed up. And in this 
mobile world, you have to carry it along with you. Many people, me 
included, will be happy to have others tend our "possessions" by 
subscribing to them. We'll pay Acme Digital Warehouse to serve us any 
musical tune in the world, when and where we want it, as well as any 
movie, photo (ours or other photographers). Ditto for books and blogs. 
Acme backs everything up, pays the creators, and delivers us our desires. 
We can sip it from our phones, PDAs, laptops, big screens from where-ever. 
The fact that most of this material will be available free, if we want to 
tend it, back it up, keep adding to it, and organize it, will be less and 
less appealing as time goes on.

Embodiment ??? At its core the digital copy is without a body. You can take a 
free copy of a work and throw it on a screen. But perhaps you'd like to 
see it in hi-res on a huge screen? Maybe in 3D? PDFs are fine, but 
sometimes it is delicious to have the same words printed on bright white 
cottony paper, bound in leather. Feels so good. What about dwelling in 
your favorite (free) game with 35 others in the same room? There is no end 
to greater embodiment. Sure, the hi-res of today ??? which may draw ticket 
holders to a big theater ??? may migrate to your home theater tomorrow, but 
there will always be new insanely great display technology that consumers 
won't have. Laser projection, holographic display, the holodeck itself! 
And nothing gets embodied as much as music in a live performance, with 
real bodies. The music is free; the bodily performance expensive. This 
formula is quickly becoming a common one for not only musicians, but even 
authors. The book is free; the bodily talk is expensive.

Patronage ??? It is my belief that audiences WANT to pay creators. Fans like 
to reward artists, musicians, authors and the like with the tokens of 
their appreciation, because it allows them to connect. But they will only 
pay if it is very easy to do, a reasonable amount, and they feel certain 
the money will directly benefit the creators. Radiohead's recent 
high-profile experiment in letting fans pay them whatever they wished for 
a free copy is an excellent illustration of the power of patronage. The 
elusive, intangible connection that flows between appreciative fans and 
the artist is worth something. In Radiohead's case it was about $5 per 
download. There are many other examples of the audience paying simply 
because it feels good.

Findability ??? Where as the previous generative qualities reside within 
creative digital works, findability is an asset that occurs at a higher 
level in the aggregate of many works. A zero price does not help direct 
attention to a work, and in fact may sometimes hinder it. But no matter 
what its price, a work has no value unless it is seen; unfound 
masterpieces are worthless. When there are millions of books, millions of 
songs, millions of films, millions of applications, millions of everything 
requesting our attention ??? and most of it free ??? being found is valuable.

The giant aggregators such as Amazon and Netflix make their living in part 
by helping the audience find works they love. They bring out the good news 
of the "long tail" phenomenon, which we all know, connects niche audiences 
with niche productions. But sadly, the long tail is only good news for the 
giant aggregators, and larger mid-level aggregators such as publishers, 
studios, and labels. The "long tail" is only lukewarm news to creators 
themselves. But since findability can really only happen at the systems 
level, creators need aggregators. This is why publishers, studios, and 
labels (PSL)will never disappear. They are not needed for distribution of 
the copies (the internet machine does that). Rather the PSL are needed for 
the distribution of the users' attention back to the works. From an ocean 
of possibilities the PSL find, nurture and refine the work of creators 
that they believe fans will connect with. Other intermediates such as 
critics and reviewers also channel attention. Fans rely on this 
multi-level apparatus of findability to discover the works of worth out of 
the zillions produced. There is money to be made (indirectly for the 
creatives) by finding talent. For many years the paper publication TV 
Guide made more money than all of the 3 major TV networks it "guided" 
combined. The magazine guided and pointed viewers to the good stuff on the 
tube that week. Stuff, it is worth noting, that was free to the viewers. 
There is little doubt that besides the mega-aggregators, in the world of 
the free many PDLs will make money selling findability ??? in addition to 
the other generative qualities.

These eight qualities require a new skill set. Success in the free-copy 
world is not derived from the skills of distribution since the Great Copy 
Machine in the Sky takes care of that. Nor are legal skills surrounding 
Intellectual Property and Copyright very useful anymore. Nor are the 
skills of hoarding and scarcity. Rather, 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.

In short, the money in this networked economy does not follow the path of 
the copies. Rather it follows the path of attention, and attention has its 
own circuits.

Careful readers will note one conspicuous absence so far. I have said 
nothing about advertising. Ads are widely regarded as the solution, almost 
the ONLY solution, to the paradox of the free. Most of the suggested 
solutions I've seen for overcoming the free involve some measure of 
advertising. I think ads are only one of the paths that attention takes, 
and in the long-run, they will only be part of the new ways money is made 
selling the free.

But that's another story.

Beneath the frothy layer of advertising, these eight generatives will 
supply the value to ubiquitous free copies, and make them worth 
advertising for. These generatives apply to all digital copies, but also 
to any kind of copy where the marginal cost of that copy approaches zero. 
(See my essay on Technology Wants to Be Free.) Even material industries 
are finding that the costs of duplication near zero, so they too will 
behave like digital copies. Maps just crossed that threshold. Genetics is 
about to. Gadgets and small appliances (like cell phones) are sliding that 
way. Pharmaceuticals are already there, but they don't want anyone to 
know. It costs nothing to make a pill. We pay for Authenticity and 
Immediacy in drugs. Someday we'll pay for Personalization.

Maintaining generatives is a lot harder than duplicating copies in a 
factory. There is still a lot to learn. A lot to figure out. Write to me 
if you do.

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