Fame, Fortune, and Free Content

(via Arnold Kling)

Keeping with our IP discussion, Clay Shirky has an interesting post on the economics of free content. In particular, he comments on how the internet shifts the balance of the "mandatory payment vs. voluntary donation" towards the voluntary:

People want to believe in things like micropayments because without a magic bullet to believe in, they would be left with the uncomfortable conclusion that what seems to be happening -- free content is growing in both amount and quality -- is what's actually happening.

The economics of content creation are in fact fairly simple. The two critical questions are "Does the support come from the reader, or from an advertiser, patron, or the creator?" and "Is the support mandatory or voluntary?"

The internet adds no new possibilities. Instead, it simply shifts both answers strongly to the right. It makes all user-supported schemes harder, and all subsidized schemes easier. It likewise makes collecting fees harder, and soliciting donations easier. And these effects are multiplicative. The internet makes collecting mandatory user fees much harder, and makes voluntarily subsidy much easier.

Weblogs, in particular, represent a huge victory for voluntarily subsidized content. The weblog world is driven by a million creative people, driven to get the word out, willing to donate their work, and unhampered by the costs of xeroxing, ink, or postage. Given the choice of fame vs fortune, many people will prefer a large audience and no user fees to a small audience and tiny user fees. This is not to say that creators cannot be paid for their work, merely that mandatory user fees are far less effective than voluntary donations, sponsorship, or advertising.

Because information is hard to value in advance, for-fee content will almost invariably be sold on a subscription basis, rather than per piece, to smooth out the variability in value. Individual bits of content that are even moderately close in quality to what is available free, but wrapped in the mental transaction costs of micropayments, are doomed to be both obscure and unprofitable.

I've always thought that the usual arguments for copyright- that absent copyright and a means for cashing in on your works, the market for creativity will be undersupplied- were a bit off. Most of the creative people I know are creative because they have a drive to create: to draw, write, sing, sew, perform, etc. They do it because they like/love to do it (and, generally, because they have natural talent at what they do), not because they can/could make a lot of money off what they do. Indeed, a friend of mine who is an artist can, when she's just sitting around idly sketching, make works in about 5 minutes that would sell for (at least) $15 at conventions- and yet she's never satisfied with her 'doodles' and so rarely puts anything up for sale (its not good enough, in her opinion).

So being that the creative genius is usually uncommercial, it would seem that copyright mainly serves to bring marketers and distributors into the game (people that will do what the artist generally does not want to do, in order to make the art a commercial success), not more artists. I wonder, too, how much value is added from those artists who DO come forward strictly for the cash... (or, in other words, the theoretical artist that would be brought out by copyright protection and/or produce more, and thus would remove their talent from the market without such protection)

It would seem that everyone can be their own "content entrepreneur" now- do it yourself, capture an audience, provide content, THEN generate money. It would seem that once you have an audience, methods for revenue generation would make themselves more apparent, rather than trying to charge at once. And Arnold Kling remarks that "... the economics of content are that most of the value-added comes from the filtering process, not the creation process." I would agree.

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