Showing posts with label free riders. Show all posts
Showing posts with label free riders. Show all posts

07 June 2007

Resolving the Open Conundrum

One of the central questions around openness is: Who pays? If stuff is freely available, where does the money come from?

In fact, the answer is simple: if the free stuff is valuable to certain people, those people will pay for it, even if it is free. Why? Because if they don't, it will disappear, and they will have lost something they valued.

But what about the free riders? Well, what about them? If you are getting what you want for a price that you consider fair, what's your problem? In fact, it's the free riders who have the problem: after all, who wants to look in the mirror and see a parasite?

Here's an organisation that gets this:

But why do our readers give so much to access content that is ‘free to the world’? They value our independence enormously and respect us for our transparency and honesty in requesting funds and the day to day operations of our organisation and they are realising enough real value from our free content that they want to ensure our business is sustainable.

(Via Open Access News.)

05 May 2006

Music for Grown-Ups: Open, Collaborative Pricing

Any fool can knock the music business for their short-sighted refusal to work with the Internet, rather than against it (heaven knows, I've done it myself). But coming up with constructive suggestions as to how they might make money without employing the digital ninja overkill of DRM is less easy. This makes any example of a singer/label who's not only found a way to treat the audience as adults, but is making money by doing so, a real find.

She's Jane Siberry, and old fogey that I am, I've never heard of her. But the who isn't as important as the what, which she calls self-determined pricing. Basically, you get to choose how much to pay for the music you buy. Here are the details:

Like many, I'm restless and impatient with living in a world where people are made to feel like shoplifters rather than intelligent peoples with a good sense of balance. I want to treat people the way I'd like to be treated. 'Dumbing UP' (as opposed to 'dumbing down').

WHAT ARE SELF-DETERMINED TRANSACTIONS?
NOT donations
NOT pay-what-you-can
NOT guilt-trips
NOT tests of your integrity
ARE TRANSACTIONS

You decide what feels right to your gut. If you download for free, perhaps you'll buy an extra CD at an indie band's concert. Or if you don't go with your gut feeling, you might sleep poorly, wake up grumpy, put your shoes on backwards and fall over. Whatever. You'll know what to do.

WHAT YOU WILL FIND AT SHEEBA STORE
FOUR choices on pop-down 'buy' button

1. free (gift from Jane)
2. self-determined (pay now)
3. self-determined (pay later so you are truly educated in your decision)
4. standard (today's going rate is about .99)

STATISTICS BAR: You can see what the paying trends are.
GIFTS: You can still send mp3 gifts to friends with any payment choice.

Aside from the wonderful maturity of this approach - and the maturity that it assumes in the buyer - the other interesting thing is that the pricing mechanism is essentially open and collaborative. By showing what others are currently paying, it sets a kind of community standard for conduct. The pressure to conform to that standard comes not from the artist - and certainly not from corporate lawyers threatening to sue you, your family and your dog into kingdom come - but from the community of your peers (peers at least in terms of the music you like).

It is this that makes Sheeba Store's experiment so important, because it can be generalised to all kinds of digital goods where there are no obvious ways to set a fair price. Open, collaborative pricing is by definition fair (at least within that particular community), it is self-generating and self-regulating.

Given the fact that the tracks are selling for non-zero sums (and that some people do pay more than the average, making up for any perceived "free riders"), the system seems to be working (at least in the short term). Now if only the established music industry were mature enough to see the sense and justice of this approach, and take it for a spin themselves....