Okay, this video is three years old, but it’s still relevant because it represents a persistent, underlying faith in an “economic model” that enables even well-meaning people to think they’re doing the world a favor by pimping for the Web industry. What Mike Masnick, editor of TechDirt, says in this video is that if your business makes a product that can be converted into a digital file — a movie, an album, a TV show — that the natural price for that product is zero. Moreover, if you fail to understand why this a good thing, it’s because you’re “unwilling to embrace new opportunities.” In other words, the basic premise of Investor + Producer = ROI may still apply to making iPads, but it no longer applies to the music or motion pictures that might play on them.
I know I’m not the economic futurist Masnick is, and maybe I just have a knee-jerk reaction to white boards, but if I saw this same video fifteen years ago, I’d assume it was satire. Sadly, no. Masnick actually believes what he’s saying here, and he reflects either the belief, or at least the PR talking points, of the tech industry he represents. And when you engage a firmly-held belief in a debate on policy (let’s say regarding the digital exploitation of creators), your opponent is only pretending to talk about the details. In a nutshell, you can’t have a debate about how to solve a problem with someone who believes the problem doesn’t exist.
UPDATE: As if on cue, read this article by Adam Lipsius from the Huffington Post.
Of course you are right. Masnick mistakes marginal cost for total cost. Lots of businesses have low marginal costs and high total costs – rental cars for example, or airplanes. And if you only charge marginal cost, you never recover your fixed cost and you go broke. That’s why Masnick makes silly presentations and doesn’t run a business.
My goodness, that’s depressing.
1) I’ve heard of the free model being applied to books now. Nobody buys book merchandise unless it’s for Twilight, so that leaves personal appearances, which is fine if you’re a gadfly like Neil Gaiman, but screws someone like Thomas Pynchon. While I like Gaiman, I’d trade ten of him for one Pynchon.
2) What people seem to forget about merch is that it simply passes down the exploitation. Making money off merch requires either heavily marking things up or relying on criminally cheap labour.
It seems easier to just pay people for their work directly.