Friday, March 26, 2010

One Million Screwdrivers: The Bassinet Story (Part 5 of 5)

This is an article in a series called One Million Screwdrivers. You may read all the articles in this series by clicking here.

My wife and I had a bassinet given to us when our first child was born. It was decent enough for a piece of furniture that would only be around for a few months. After our daughter grew out of it, we passed it over to one of our friends with a newborn, and then recouped it again when we had our second child. With our second child finally growing out of that bassinet, and with no plans on having another baby, the bassinet had no use to us anymore. With a house of four, our space had diminished further... so, not knowing anyone with a newborn to give it to, we needed to get rid of it fast.

A comparable bassinet would have sold for $200 to $300, but we didn't want to wait that long. We could arrange a time for someone to come by and pay us $50 or something, but that might involve an investment of time on our part, a scarcity we did not have. We could take it to Goodwill and drop it off as a donation for the tax write-off, but that would also require an investment of time... same problem. Despite the logic pointing us to post it on Craigslist, my wife had attached a huge amount of sentimental value to it—after all, it had protected both our newborn daughters in the most fragile and beautiful moments of their lives. My wife didn't want to just give away this bassinet to some random stranger who might snatch it up and resell it for a profit.

But, in the end, she gave in. I took the bassinet downstairs, placed it outside our closed garage door, and posted an ad on Craigslist saying, "Free bassinet. Great condition. First come, first served!" It was gone before sundown.

That evening, my wife was searching Craigslist for my original ad and found this post completely by accident:

A big, big thank you to the couple who gave this stuff away. I picked up the bassinet with the sheets, etc. in it a little while ago. Our bassinet had been damaged beyond repair in an accident, so we were really needing another. Many thanks!! I am just thrilled with the bassinet!

Our intent was not really charitable, but pragmatic. Still, it felt good. We gave up our control, let our bassinet go out into the world, and it found a good home. Letting the bassinet go was worth the risk.

THREE DAYS OF LOVE & PEACE
Here's a little known fact about Woodstock—it was one massive act of piracy. Originally, the organizers had intended to charge for tickets but their three foot wooden fences were immediately pushed over by a wall of hippies. Following a tense moment of pondering legal action, the Woodstock organizers considered how many people were ignoring their legal rights, i.e., everyone, and deduced that any attempt to enforce their legal rights would lead to riots. Of course, nobody knows whether Woodstock would have retained its place in music history as the concert of all time if its organizers had been able to successfully charge for tickets, but it's safe to say that many people still talk about Woodstock because it was a free concert with the greatest musicians of their generation. Today, it's still possible to cash in on vintage Woodstock T-shirts. Think about that. Woodstock happened 40 years ago last year... and they're still selling T-Shirts. If that isn't the power of free, I don't know what is.



AN OCEAN OF IRON
Many in entertainment sectors have an unhealthy fixation with the word, "free". They consider putting a free price on their content, or giving away copyable versions of their content, as synonymous with calling their content worthless. Price and value are distinct ideas, but they hear "free" and further arguments start to fall on deaf ears.

I've tried to use air and water as examples of how even "free" goods can still be enormously valuable, but the counter-arguments are that air and water aren't free because we still pay taxes to keep the air and water clean. Okay... there's some truth in that, I guess. Anyone in Los Angeles knows that water from the tap is expensive, even it feels free. However, this completely misses the point about abundance: you can go into any restaurant in America and ask for a glass of water and not be charged for it because it is so abundant. Water priced at $0.00 does not demean its value. Without water, we would die. Yet it is abundant, so its price is zero.

But fine, let's dance. I have the ultimate trump card—the outer core 3,200 miles below the Earth's surface. The outer core is an ocean of 4400°C nickel iron with insufficient pressure to be converted into a solid state. Because iron is electrically conducting, its swirling eddies produce a massive magnetic field extending beyond Earth by several thousand miles... a magnetic field which shields us all from lethal doses of radioactive solar winds. More than air, water, or even sunlight, Earth's swirling outer core of liquid metal frequently keeps us from burning to a crisp. Thus, the outer core is indisputably one of the most valuable things sustaining life on this planet. However, despite this incredible value, we pay nothing to sustain it. Years go by and we hardly even give it a thought, but without that liquid metal constantly churning thousands of miles beneath our feet, we would all die from solar radiation. Abundant means free, not worthless.

The hypothetical example of one million screwdrivers was to show that when you lower costs, you gain more buyers... and buyers become fans... and fans come back to buy more. Yet when you lower your costs to "free", you stop making money and start getting something else entirely, something potentially far more valuable than money—attention. Why is it more important? Because attention brings discovery, fans, opportunity and influence. The more fans, the more leverage you have to make money from other outlets.

That's where a lot of people in the Analog Age need to take a leap of faith. They're still making money off $25 DVDs. They control the distribution paradigms and it's worked very well for them, thank you very much. Why should they give that up? They'll just push for tighter Digital Rights Management and pay high-priced lawyers to send out cease-and-desist letters.

Here's how I see the two different approaches:

ANALOG AGE APPROACH
  1. Retain control and spend money on DRM, lawyers and marketing.
  2. Make money selling infinite goods. (MP3, MPEG, JPG, PDF)
  3. Have limited/niche attention, small fan base.
  4. Hope enough fans remain faithful.
  5. Be resentful about piracy.

DIGITAL AGE APPROACH
  1. Cede control and save money on DRM, lawyers, and marketing.
  2. Don't make money with infinite goods by themselves.
  3. Get massive attention from freely distributed infinite goods.
  4. Leverage that massive attention to discover and nurture new fans.
  5. Make money selling scarce goods. (time-saving, convenience, authenticity, exclusivity, etc.)
  6. Hope your infinite goods get pirated more!

The ones who refuse to acknowledge any or all of these arguments seem to have a vested interest clouding their judgement, or they've never thought too much about the issues, or they have a monochromatic morality forged in a Analog Age. They think pirates are evil, so they push for increasingly stricter DRM. So I have to wonder: is the source of this conflict merely two incongruous ways of looking at the world? Media futurist Gerd Leonhard put it this way, and we'll use this eloquent piece to conclude this blog series:
After countless conversations and debates over the past 8 years, I have come to think that the DRM issue is largely a question of which reality one believes to be true—and we must address the solution as such, too. No research, no statistics, no hard facts, and no futurists will tell us conclusively whether the record companies should or should not use DRM when selling digital music. To make this decision will not be science but an art!

Do you believe that the sharing of music—and therefore its consumption, in general—needs to be controlled, that a certain amount of friction is required to extract any meaningful payments for music in a digital environment, that the average consumer will always try to avoid paying anything, if given any opportunity to do so, that it is impossible to sell something that is, to a large degree, also obtainable for free, and that the monetary value of music really is in 'the copy' of a song? Then you would indeed need to be a strong advocate of technical protection measures and digital rights management software—in your mind the control of those 0s & 1s would be a definitive prerequisite for any monetization. No control equals no income; a ‘free for all’ is the result of having too little control.

Or do you believe that a consumer will always pay for something that is easy, enjoyable and trouble-free to acquire and that has demonstrated, tangible and trusted value, that it’s not just the copy of a file or a piece of plastic that represents the real and inherent value of music, that friction can not be successfully re-inserted into our increasingly frictionless commerce environments, that our business problems cannot be solved with technological measures? Then you would be against DRM or TPMs, unless they could be 100% device-compatible, unobtrusive and behind-the-scenes, and indeed offer actual benefits to the end user—this certainly looks an exceedingly tall order that is, imho, beyond reach as far as digital music commerce is concerned.

Do you believe that music can be sold 'like water', i.e., as an ubiquitous asset that can both feel-like-free (like tap water), as well as be paid-for (like premium priced bottled water, a $100 billion business), or should music commerce remain strictly in the realm of units, copies and their various controlled physical or digital embodiments?

This is an article in a series called One Million Screwdrivers. You may read all the articles in this series by clicking here, or the other articles here:
  1. Introduction
  2. The Experiment
  3. Ripple Effects
  4. Lessons Learned
  5. The Bassinet Story

1 comment:

Luci Temple said...

Thanks Ross, great post :)