Symbol of the digital age

Here is a metaphor for our digital age, a beautifully painted large colour sign on the outside of a corner shop in Armidale NSW – a regional centre in northern New South Wales, about seven hours drive north of Sydney and five hours drive south of Brisbane.  “The Trading Post” was one of the early “buy-and-sell” services in Australia, and for many years operated as a paper (I am quite certain that it has wholly gone online).

So the lovely ad here – partially covered with green ivy – is certainly a symbol of our digital age.

Free: The Business Model

(I originally wrote this review article in 2009; as it is still relevant I am reprinting it here in an updated form.)

I am a great fan of Chris Anderson.  In July 2007 I presented a conference paper at the Australian and New Zealand Communications Association conference in Melbourne about it his book The Long Tail, where I analysed the Rural Health Education Foundation’s “long tail” effect of watching and listening to our programs online.

Anderson’s has a book entitled Free: The Future of a Radical Price.  As with The Long Tail, Anderson has done a great job at capturing a certain “cultural moment”, in terms of how we relate to information, entertainment and our connected world.  His basic concept is that if give people lots of real value free items, there are a number of business models that will allow you to make money.  Anderson summarises it thus in his book (page 3):

Therein lies the paradox of Free:  People are making lots of money charging nothing [Google being the prime example of this].  Not nothing for everything, but nothing for enough that we have essentially created an economy as big as a good-sized country around the price of $0.00.  How did this happen and where is it going?

In the Prologue of his book (pages 1 & 2), he points to the example of the Monty Python team:  claiming to be exasperated as to the amount of digital piracy of their programs, in November 2008 they posted lots of their high quality archival video material free on YouTube.  But they asked for:

…. something in return.  None of your drivelling, mindless comments.  Instead, we want you to click on the links, buy our movies & TV shows and soften our pain and disgust at being ripped off all these years.

And according to Anderson, they were wildly successful, with their DVDs climbing “to number  2 on Amazon’s Movies and TV best-sellers list, with increased sales of 23,000 percent”.

The point that Anderson is making is that providing free information and entertainment is the way the world now turns – having the “force of economic gravity”, and that organisations will need to adapt to make money off of the “free”.  Giving away lots of free samples will encourage purchase, provide training instead of selling software, sell merchandise and concert tickets and don’t worry about the free downloading of music, but instead charge for extras and add-ons and up-sells.  He makes the point that the difference between something which costs and something which is free is enormous, even if the cost is small.  An example:  Amazon’s offer of “free shipping” for orders greater than $25 (alas, not available in Australia, but that’s a whole other discussion) is wildly successful.

“Give a product away, and it can go viral”, Anderson writes.  I know this to be true.  At the Rural Health Education Foundation, where I have worked since early 2003, we give away large numbers of health and medical educational DVDs (about 23,000 in 2009/10 alone, and that was not an unusual year).  But when the Foundation offers the same product/s for sale at a price, even at extremely low prices, the orders fall away dramatically.  The business model of the Foundation is, interestingly, also based on “free”, although not the commercial model which Anderson discusses.  The model is to receive funding up front to produce and distribute the educational programs and then give as much of it away free as possible (with as little cost).  When the “free” is digital (Internet delivered) or via television (satellite or national broadcast), it’s pretty cheap to add lots of users – although in the Foundation’s experience it is not exactly zero:  there is a cost to free giveaways.

It is important to note that, like his “Long Tail” concept, Anderson builds directly on the work of others, updating it to the very current present and near future.  This sort of futurist writing – explaining what we have just done and are about to do, can be very exciting, and Anderson is a master of this, even if he is often so excited about his concepts that sometimes he sounds more like an evangelist than anything else.

The context here is important:  print editions of newspapers are disappearing in the USA, the Google search (and advertising) model is killing many of them (see the July 14, 2009 article by Peter Osnos entitled “What’s a Fair Share in the Age of Google?” at the Columbia Journalism Review or the Century Foundation (still current).  (Drawing on my work with the Rural Health Education Foundation, I presented a paper on new media business models in Brisbane in July 2009 at the Australian and New Zealand Communications Association conference.)

In his article, Osnos discusses the concept of “information wants to be free”, noting that it originally came from Stewart Brand – who said it at a computer programmer’s convention in 1984 and later detailed in his book 1987 The Media Lab: Inventing the Future, writing the following:

Information Wants To Be Free (note: capitals by the author).  Information also wants to be expensive.  Information wants to be free because it has become so cheap to distribute, copy and recombine – too cheap to meter.  It wants to be expensive because it can be immeasurably valuable to the recipient.  That tension will not go away.  It leads to endless wrenching debate about price, copyright, “intellectual property”, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.

And remember this was written more than 22 years ago.

Esther Dyson (see http://www.edventure.com/ for her latest activities) was also another pioneer of thinking in this area, particularly with her December 1994 article (from Release 1.0) entitled “Intellectual Value” (available at Wired magazine archives).  Dyson wrote at the time:

Chief among the new rules is that ‘content is free’.  While not all content will be free, the new economic dynamic will operate as if it were.  In the world of the Net, content (including software) will serve as advertising for services such as support, aggregation, filtering, assembly and integration of content modules, or training customers in their use.

Discussing media and entertainment, she accurately predicted the rise of Google:

The payments to creators are most likely to come not from the viewers, readers, or listeners, but from advertisers….  The challenge for advertisers is to make sure that their advertising messages are inextricable from the content.

That was now seventeen ears ago.  Like Brand, she too was an early evangelist.  And her predictions were wildly optimistic:  they were not wrong, just way too early.  As Nobel Prize winner Paul Krugman pointed out in the New York Times on June 6, 2008:

The predictions of ’90s technology gurus are coming true more slowly than enthusiasts expected – but the future they envisioned is still on the march.  In 1994, one of those gurus, Esther Dyson, made a striking prediction: that the ease with which digital content can be copied and disseminated would eventually force businesses to sell the results of creative activity cheaply, or even give it away. Whatever the product – software, books, music, movies – the cost of creation would have to be recouped indirectly:  businesses would have to ‘distribute intellectual property free in order to sell services and relationships.’

There is an interesting rule here:  the predictions of “technology boosters” (Dyson, Brand et al) are almost always overly optimistic (has broadband reached all of rural Australia yet?), but most do come good … eventually, however only if you wait long enough.

Mark Cuban has an interesting (July 5, 2009) blog post on the topic of “Free” entitled “When you succeed with Free, you are going to die by Free”, where he points out that “The problem with companies who have built their business around free is that it is far from free to remain successful.”

Cuban’s point is that the more success there is, the harder it will be to stay on top.  All “freemium based content plays” will have a company that replaces them, their “Black Swan” (from the Nassim Nicholas Taleb book of the same name) competitor that will appear and replace them:  Myspace to Facebook, even Google:

We don’t know who their Black Swan company will be.  But we all know it will happen don’t we?  The only question is when.  Of course Google knows it as well.  Which is exactly why they invest in everything and anything they possibly can that they believe can create another business they can depend on in the future.

Do you think Cuban is wrong?  Remember AOL (also known as America Online)?  Some years back it was so big it bought Time Warner, movies and all.  And where is AOL now?

Reportedly, Anderson’s book Free also made The New York Times list.  And Anderson truly “puts his money where his mouth is” (as they say) – offering it, as they say, totally FREE, through SCRIBD.  According to Anderson, by late July 2009 the free digital version had already been downloaded “between 200,000 and 300,000 times”.  And yet people were buying it as well, helping Anderson to prove his point that “free” can be an effective business model.

By the way, Free is NOT available “free” in print form for those of us who live in Australia – and presumably in most other places outside the USA.  Back in July 2009 I went to the “Free” download page on SCRIBD and was given the following message:  “Sorry, this content is geographically restricted.  Due to our agreements with our publishing partners, the document you requested is only available to users located in the United States.”  So “Free” is not necessarily … free after all.  It was also offered free for a brief period on Amazon’s Kindle (not available in Australia at that time), Sony Reader and iTunes.  You could, however, download the audio book free (I did this, so it works, note 285 MB zip file – not an insignficant file size) by going to Wired magazine of 17 July 2009.  As far as I can tell, as of this writing (19 May 2011), there is still no preview available on Google books.

By the way, SCRIBD has a little sting to its website tail.  Once you are on it, the site will not let you go back to your previous website if it was in the same browser window.  It’s irritating.  So open a new window every time you go there.  You’ve been warned.

Lonely Planet Melbourne jobs go

Most international travellers are familiar with the Lonely Planet guidebooks series, and some read nothing but.  We in Australia were also rightly proud that it was founded by two Australians in 1972 – Tony and Maureen Wheeler – and has been headquartered in Melbourne ever since.  In October 2007, the company was purchased by BBC Worldwide, the commercial arm of the British Broadcasting Corporation.

And this past week, that Melbourne headquarters continuation has been thrown into real uncertainty, with the announcement on May 13th that the online division would be moving to London.  Lonely Planet’s chief executive, Matt Goldberg, reportedly told the Sydney Morning Herald that “the strong Australian dollar” was one reason for the move.  One (anonymous) staff member was quoted as saying that:

The relocation is a surprise, but it was fairly clear there were going to be some fairly savage cuts.  I’ve had the feeling that the BBC has been wanting to move the online publishing side of things to London anyway, and maybe they were just waiting for an excuse.

Just wait for it.  How long will it be before the rest of the headquarters is moved to London?  The high Australian dollar reason seems pretty obscure.  Have you been to London lately and seen how expensive things are there?  And all of this provides resonance of the never-really-gone “bad old days” when British publishers ruled Australia like the fiefdom they have always regarded it as being.  Truly, the BBC – a national broadcaster – is behaving like any commercial publisher.  Watch out, Australia.

And here’s the thing:  If I were the Wheelers back in 2007, would I have also sold my company to the BBC?  Chances are I would have, too.

The end of bookshops in a Borders age

Big news in Australian bookselling in recent weeks has been the imminent closing down of a number of Borders bookshops, following the bankruptcy of the American chain.  What a shame, but not wholly unexpected.  My first experience with Borders was in East Brunswick, New Jersey – my first real book superstore – back in around 1993 or 1994.  What a delight to spend time in there.  So when the Borders chain opened in Australia, I was thrilled.  When others complained that there was just a lot of American books, I found it wonderful – it SMELLED like an American bookshop!  But two things happened: (1) Borders over-expanded (just look at the list of where they opened large shops:  really did some of those malls really want or need 250,000 titles in stock? I doubt it), and (2) they started treating their patrons like, well … shit.  I did not mind (too much) that they did not discount, but I sure minded when they refused to stock latest books (I looked in vain for Philip Roth’s latest book “Nemesis” for months after it was released in late 2010 in the Borders Macquarie Centre, Hornsby and Chatwood shops, all in Sydney’s north shore) and they started charging GREATER THAN the Australian Recommended Retail Price (RRP) – a good example was the book The Imperfectionists by Tom Rachman – RRP $32.95 in Australia, except Borders was charging $36.95, almost 10% higher.  Who did they think they were?  I KNEW the retail price, and held that book in my hands four times but each time refused to buy it at 10% OVER the RRP.

I am deeply saddened by what appears to be the passing of Borders (I doubt the chain can survive this, mostly because most publishers will probably not want to supply them when they are not paying), but I am not surprised by it.  I love bookshops, almost as much as I love movies, but bookshops must respect their patrons.

Let me count the different prices for David Remnick’s ‘The Bridge’

Peter Osnos is an experienced journalist who writes a fascinating monthly column called “The Platform” on journalism and the media for the Century Foundation.  His most recent article (14 April 2010) is entitled “Bonanza for Book Buyers”, and reports on all of the diverse ways that people can now obtain a copy of a new book – using the example of The Bridge: The Life and Rise of Barack Obama by David Remnick (editor of The New Yorker).

Here is an extract from his article:

Last week, Alfred A. Knopf published The Bridge: The Life and Rise of Barack Obama by David Remnick. Here are the ways you can buy it: The hardcover list price is $29.95 and the CD audio lists at $50. But that is barely the beginning. Amazon sells the printed book for $16.47, the Kindle e-book version for $14.82, the audio CD for $31.50, and the downloadable audio for $34.12. B&N.com has a “member” price for the hardcover of $15.52 and the CD for $36.  At Borders.com, the book is $17.97.  The Sony Reader e-book is $14.50.  A mid-Manhattan Barnes and Noble sells the hardcover at full price. At a nearby Borders, it is discounted to $21, and at Just Books in Old Greenwich, Connecticut, the book is sold at list. Audios there are a “special order.” The new iPad app iBooks doesn’t offer an e-book because Random House, of which Knopf is an imprint, has yet to reach agreement with Apple on terms for sale on its device. But you can get the Kindle edition on an iPad app.

By now you should be persuaded that there are many options and multiple formats.

In key respects, the release of The Bridge has followed a time-honored pattern. It has received admiring reviews in the New York Times, the Washington Post, the Los Angeles Times, Time, and the Economist, among those I read. The combination of its subject and Remnick’s stature as editor of the New Yorker and author of previously successful books pretty much guarantees a bestseller. Based on its Amazon ranking in the top tier of new titles, initial book sales are strong. But what is distinctive in this publishing story is that the competition for readers is so much more about choices and platforms than it ever was.

I have long been aware that the price of a book is no longer simply “the price” – if you know what I mean.  Amongst other things, Amazon has changed the nature of bookselling not only in the USA, but worldwide, including here in Australia.  (The rumour is that Amazon is in fact the biggest bookseller in Australia; even ten years ago reportedly it sent 250,000 packages per week here.)

Here is  the situation in Australia, based on my short research on the cost (and availability) of The Bridge:

–          Borders (Australia) offers the hardcover at A$52.95 (with free delivery if ordered online).

–          You can order it from Amazon at Aust$18.36 plus shipping to Australia of A$11.12 shipping and handling for a total of Aus$29.48.

–          Booktopia (Australian online bookseller, based in Sydney) offers the hardcover book for $40.50 (free for pickup in Lane Cove West, in Sydney) or with $6.50 shipping – thus total $40.50 or $47.00 with shipping and the CD for $63.50.

–          Readings (a variety of Melbourne locations) $31.90 trade paperback edition available 1 May.

–          Angus and Robertson has it listed at $44.95 for the hardcover.

–          Dymocks is selling the hardcover for $41.95 plus shipping of $5.50.

–          Gleebooks (Sydney) offers a paperback edition for $39.99 available May.

–          Abbeys Books (Sydney) lists it for $39.99 paperback edition available May.

–          Co-op bookshop lists it for $39.99 paperback edition (presumably minus 10% discount for Co-op members).

–          The Nile online bookshop offers the hardcover for $48.99 plus shipping.

And the winner (or, rather, cheapest) of them all?  The Book Depository, out of the UK:  Aus$26.71 (free shipping), almost $3 less than Amazon.  Don’t believe me?  Go to http://www.bookdepository.co.uk/book/9781400043606/The-Bridge to see for yourself.

Of course, I am not the only person to notice this.  A July 14, 2009 article by Michael R. James entitled “Parallel This:  Top Ten Book Prices Compared” on Crikey.com, did an extensive analysis of best-sellers.  He too noted The Book Depository was usually the cheapest of them all.

And if you would like a good listing of Australian booksellers, go to http://www.aussieeducator.org.au/reference/books/booksellers.html

Digital books in Australia

Do you live in Australia and are confused about the nature of digital book downloads here?  You should be.  Despite the increased sophistication of the Australian publishing world and the strong market for purchasing books in this country, we are still at the mercy of American and British publishers.  As Rosemary Sorensen writes in the October 31 edition of The Weekend Australian Review (“Overflow”, page 21):

As we wait for the Brits and the Americans to decide just what format Australian e-books will be sold in … we’re totally dependent on decisions made in the offices of gigantic corporations far away.  It’s like the bad old days ….

Except it is now.

Made more pressing by the recent (October 14, 2009) announcement that Amazon’s Kindle is now available (from October 19) in most countries around to the world – including Australia.

For more discussion on this, go to an excellent summary on Book Thingo, and the news item on Australian Bookseller and Publisher Online.

New Australian Centre for Public Interest Journalism launched

A new Australian centre has been launched:  The Foundation for Public Interest Journalism at Swinburne University in Melbourne has been launched, with its board of directors announced on August 17, 2009.  It will be modelled in part on the American community-funded journalism site spot.us.  This is a pretty exciting development – particularly given the dire state of many traditional quality media organisations (Fairfax and the New York Times, stay in there!).  I have volunteered my services expertise in the area of fundraising to the new organisation.  More reports to follow.  My recent research on new business models for Australian non-profit media organisations is highly relevant.

What Girls Want – Stephenie Meyer, Caitlin Flanagan and the “Twilight” series

As I write this, Stephenie Meyer has six of the top ten “bestsellers” in the Sydney Morning Herald list (supplied by Nielsen BookScan) published on Saturday 29th March 2008, in first, second, third, fourth, sixth and seventh places, with the book Twilight appearing twice (the “regular” edition in fourth place and the film tie-in in seventh place).  This may not be unprecedented (the Harry Potter books often monopolised the top places in this list in their time), but this has been going on for quite some time and speaks to a significant cultural phenomenon that I am not certain we all understand.  (Nielsen BookScan USA also lists Meyer’s books in fourth, fifth, sixth and ninth position.  BookScan New Zealand lists them in first, second, third, fourth, fifth and eighth position.)  The New York Times bestseller list, which appears to count things differently – there Meyer has her new The Host book in the hardcover list of fiction, none in the paperback trade fiction list, none in the paperback mass market list, but then grabs first place in the children’s “series” list – with 85 weeks and counting. 

Caitlin Flanagan, a feature writer for The Atlantic, has come closest to explaining the powerful appeal of Meyer’s Twilight saga.  In her article entitled “What Girls Want” (December 2008 issue, pp. 108-120), she provides one of the most interesting, nuanced, and beautifully written analyses of what teenage girls want – and get – from reading fiction, relating it to Judy Blume, Valley of the Dolls, Peyton Place, Sisterhood of the Traveling Pants, Prep and Catcher in the Rye.   Flanagan’s extensive review article draws from personal experience, self-knowledge and has a clarity of writing that is almost breath-taking at times.  Some quotes:

The salient fact of an adolescent girl’s existence is her need for a secret emotional life—one that she slips into during her sulks and silences, during her endless hours alone in her room, or even just when she’s gazing out the classroom window while all of Modern European History, or the niceties of the passé composé, sluice past her. This means that she is a creature designed for reading in a way no boy or man, or even grown woman, could ever be so exactly designed, because she is a creature whose most elemental psychological needs—to be undisturbed while she works out the big questions of her life, to be hidden from view while still in plain sight, to enter profoundly into the emotional lives of others—are met precisely by the act of reading.

And this:

It’s a page-turner that pops out a lurching, frightening ending I never saw coming. It’s also the first book that seemed at long last to rekindle something of the girl-reader in me. In fact, there were times when the novel—no work of literature, to be sure, no school for style; hugged mainly to the slender chests of very young teenage girls, whose regard for it is on a par with the regard with which just yesterday they held Hannah Montana—stirred something in me so long forgotten that I felt embarrassed by it. Reading the book, I sometimes experienced … (a) slingshot back to a world of sensation that, through sheer force of will and dutiful acceptance of life’s fortunes, I thought I had subdued. The Twilight series is not based on a true story, of course, but within it is the true story, the original one. Twilight centers on a boy who loves a girl so much that he refuses to defile her, and on a girl who loves him so dearly that she is desperate for him to do just that, even if the wages of the act are expulsion from her family and from everything she has ever known. We haven’t seen that tale in a girls’ book in a very long time. And it’s selling through the roof.

And this:

Years and years ago, when I was a young girl pressing myself into novels and baking my mother pretty birthday cakes, and writing down the 10 reasons I should be allowed to purchase and wear to the eighth-grade dance a pair of L’eggs panty hose, I knew that password. But one night a few years after that dance, I walked into a bedroom at a party and saw something I shouldn’t have, and a couple of months after that I unwisely accepted a ride to the beach from a boy I hardly knew, and then I was a college girl carrying a copy of Hartt’s History of Renaissance Art across campus and wondering whether I should take out a loan and go to graduate school, and somewhere along the way—not precisely on the day I got my first prescription for birth control, and not exactly on the afternoon I realized I had fallen out of love with one boy and had every right to take up with another—somewhere along the way, I lost the code. One day I was an intelligent girl who could pick up almost any bit of mass-market fiction that shed light on the mysteries of love and sex, and the practicalities by which one could merge the two, and read it with a matchless absorption. Valley of the Dolls had been so crucial in my life not because of its word to the wise about the inadvisability of mixing Seconal and Scotch, but for the three sentences that explained how to go about getting undressed before the first time you have sex: go into the bathroom, take your clothes off, and reemerge with a towel wrapped around yourself. One day I was that girl, and one day I was not, and from then on, if you wanted to tempt me to read a bit of trash fiction, I was going to need more compelling information than that.

For other articles by Caitlin Flanagan in the The Atlantic, click here.  For her New Yorker articles, click here.