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Malcolm Gladwell dissents from Chris Anderson's *Free*
Here are excerpts and the full original article. Excerpt:
Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds.
I haven't read the book yet, but hope to report back when I do. For this pointer I thank Eric Wignall.
Addendum: Via Chris F. Masse, Anderson responds.
Posted by Tyler Cowen on June 29, 2009 at 03:41 PM in Law, The Arts | Permalink
Comments
Is YouTube a source of systemic risk?
Posted by: Guan Yang at Jun 29, 2009 3:54:03 PM
I agree with the critique, but it's a pity that a hack like Gladwell had to make the points.
Posted by: PeterW at Jun 29, 2009 4:05:53 PM
i wonder why the new yorker chose to ignore that anderson's book appears to consist at least in part of text that he took, "free," from other sources without attribution?
http://www.vqronline.org/blog/2009/06/23/chris-anderson-free/
http://www.edrants.com/chris-anderson-plagiarist/
Posted by: curious at Jun 29, 2009 4:18:11 PM
But they are making it up on volume.
Posted by: Andrew at Jun 29, 2009 4:18:12 PM
I like Anderson. His ideas are far from sound, and are generally based on only the slimmest supporting evidence. But there's something inspiring about the way that he presents them nonetheless. I'll confess, "The Long Tail" played at least some part in steering me towards economics for my graduate field.
And while Gladwell does a good job of gleefully pointing out ways in which Anderson's arguments can fall apart, he's failed to convince me that there isn't still a germ of truth in what Anderson lays out in the book. Gladwell points to the WSJ as an example of why paid subscriptions are still viable, at a time when the entire publishing industry is crumbling around it?
Posted by: Matt at Jun 29, 2009 4:23:36 PM
I've been pondering all the things I can't buy in order to be remarkable. Walter Williams pointed out even high schoolers can be off like a prom dress in a rented limo for the night. Drugs are almost by definition tools of egalitarianism. I was amused by a desk at a convention manned by the NIH offering grants to study inequitable diseases. Aren't all diseases inequitable?
Anyway, not everything is free, but things that don't cost anything can be close enough, and spreading the rest over enough customers makes them accessible.
Posted by: Andrew at Jun 29, 2009 4:44:11 PM
Gladwell is another hack competing with Anderson in the field of magazine feature-length articles extrapolating anecdotal evidence into book-length unsupportable conclusions. To be fair to Gladwell, he has not been accused or caught plagiarizing as Anderson has. That said, it's amusing how Gladwell unselfconsciously criticizes Anderson's glib writing style and oversimplifications.
Posted by: Fazal Majid at Jun 29, 2009 5:08:27 PM
On Youtube:
Here is an interesting article on how Google actually loses far less on Youtube than most consider
http://www.telco2.net/blog/2009/06/google_the_internet_behemoth_a.html
Posted by: Alan at Jun 29, 2009 5:14:11 PM
An obscure academic journal, in contrast -- one that publishes detailed, sophisticated information of interest to a few hundred experts -- would never be able to sustain itself by going free.
Nonsense. The authors of articles written for 'obscure academic journals' are paid little or nothing for their writing. Ditto the academics who edit the journals and review the prospective papers. The credit for having the paper published is the reward for the author. These journals used to be run as quasi-non-profits until the big academic publishers snapped them up and started engaging in big-time rent-seeking by charging an arm and a leg for subscriptions (subscriptions that academic libraries could hardly do without).
In response, a there have been efforts to turn academic publishing into open-source operations, for example:
http://math.ucr.edu/home/baez/journals.html
It may not be true of all content, but academic papers are absolutely the kind of content that *should* be free. That Gladwell cites this as a prime example of the opposite doesn't bode well for his argument in general.
Posted by: Slocum at Jun 29, 2009 5:46:14 PM
The Credit Suisse analysis of YouTube has been widely debunked as being off by hundreds of millions. Commenter Alan provided one analysis; here's another from Walter Mossberg's/WSJ's AllThingsD:
http://digitaldaily.allthingsd.com/20090617/credit-suisse-far-better-at-analyzing-derivatives-than-youtube-infrastructure-costs/
The amount of time spent on YouTube, and the number of searches, are both immense. Six months ago, YouTube was already a quarter of all Google's searches. All it takes is anyone, anywhere to figure out a slightly better revenue model for video -- as Overture/Go.com once did for search clicks -- and Google can fast-follow to potentially dominate internet video the way RCA dominated early TV.
YouTube is an example of a lot of things, but not what Gladwell highlights based on his bad figures.
Posted by: Gordon Mohr at Jun 29, 2009 6:09:53 PM
So is the long tail free? Must be more expensive to make stuff and distribute it to the long tail than to the fat head, right? Anderson? Anderson? Anybody? Bueller?
Posted by: Michael F. Martin at Jun 29, 2009 6:14:17 PM
Valleywag has a very interesting take on the catfight. I didn't realize both the New Yorker and Wired were Conde Nast titles.
Posted by: Fazal Majid at Jun 29, 2009 7:44:02 PM
Slocum, aren't you doing exactly the kind of optimism Gladwell talks about? That is, you're saying the cost of the content of academic journals is small, and since it is, therefore the cost of producing such journals is small. Is it the cost of the content that's the limiting factor? Do printing and distribution count for nothing?
You also seem to be saying, even if your assumptions are valid, that since such journals could in theory be priced inexpensively one should pay no attention to the observable fact they're priced expensively in practice. Your theory may be right, but if it never has tangible results, so what?
I'm more surprised Gladwell doesn't give the obvious argument that free indicates there's no demand for something. Anderson may well be right that there are things for which charging anything at all will completely dry up demand, and it's only by making them free that the market becomes at all interested in such detritus. I wouldn't call that an endorsement of such items' quality, though.
Posted by: Hal at Jun 29, 2009 7:47:39 PM
Anderson responds to Gladwell here:
http://www.longtail.com/the_long_tail/2009/06/dear-malcolm-why-so-threatened.html
Posted by: Mike Gibson at Jun 29, 2009 8:12:18 PM
Slocum, aren't you doing exactly the kind of optimism Gladwell talks about? That is, you're saying the cost of the content of academic journals is small, and since it is, therefore the cost of producing such journals is small. Is it the cost of the content that's the limiting factor? Do printing and distribution count for nothing?
No, printing and distribution count for little -- in fact, few scholars access the physical journals any more. Instead, they download PDF files of articles. Almost the same PDFs, BTW, that were prepared by the authors (authors of academic articles don't just write the text, the format it, and provide all the graphics and figures as well) and that were previously distributed online as pre-prints by the author. What the journals add of value is peer-reviewing and editing, but those performing these functions are paid little as well. No, the publishers add little value. The cost of printing, binding and mailing paperback journals is minimal in comparison to the outlandish subscription costs (and the the outlandish costs of online access). The publishers bought sleepy but prestigious journals for pennies on the dollar in order to extract full rents from the reputation--that's all.
You also seem to be saying, even if your assumptions are valid, that since such journals could in theory be priced inexpensively one should pay no attention to the observable fact they're priced expensively in practice. Your theory may be right, but if it never has tangible results, so what?
The history is that journals did not used to be priced expensively until the big publishers realized that they could snap up prestigious journals and jack the subscription rates and libraries would have little choice but to pay. Just as the costs of distribution were dropping to near zero, the subscription costs increased dramatically. This is a relatively new phenomenon (e.g. the last decade or so). And there has been progress, in response to this, in creating 'open source' online journals and academic paper repositories (success rates vary depending on the field).
Posted by: Slocum at Jun 29, 2009 8:12:42 PM
So if I'm understanding your account, there was a price shock about ten years ago. The market went along with it, paid up, and has continued to do so for a solid decade. You, on the other hand, think the market is foolish to indicate demand that way.
It looks like you're providing an example of how people are all in favor of the free market, until the market disagrees with them.
Posted by: Hal at Jun 29, 2009 8:55:34 PM
Hal - Ever heard of PLoS? Totally free, top-tier, academic journals in several biological fields. The thing you are not mentioning, is that even though the expensive journals you are arguing about are expensive, they also charge the authors to be published! PLoS is a rapidly expanding journal set (in some fields - like Computational Biology - the top journal) that doesn't charge readers at all, and their publication fees are similar to the traditional journals. But readership has exploded.
Posted by: Colin with one "l" at Jun 29, 2009 9:29:59 PM
@hal
there is demand, and there are high prices. the prices may be justified, but the producers of the material do not receive any of the profits. the publishers do. what do the publishers bring to the table? a distribution system (which is really cheap to replicate now) and brand/reputation ownership. furthermore, the producers of the material are in most cases close friends to or the same people as the consumers of the material. therefore it is just a matter of time until some of the producers of the material either demand part of the rent or create alternative distribution / brands so that prices go down radically. it is already happening.
Posted by: babar at Jun 29, 2009 10:08:42 PM
@Slocum "academic papers are absolutely the kind of content that *should* be free"
Amen to that.
(1) A huge amount of this stuff is financed by taxpayers on the grounds that this work somehow benefits the society they are paying taxes for.
(2) By putting it behind a wall, and a stupidly high wall at that ($35 per article?? Really??) it potentially further encourages the isolation of academic research from nonacademic life.
(3) It leads to those interested in a topic to read the pre-reviewed versions, where they are still available (e.g. working papers on SSRN). One hopes that, on the whole, peer review serves to improve the work from the working paper version.
(4) Of course, academics themselves don't care much. They have access through their research libraries and download PDFs. But really, what's the point of this transfer of money from libraries to publishers? Who reads the actual journal titles in the library?
Why has the PLOS model not taken root in all disciplines?
Posted by: ZBicyclist at Jun 29, 2009 10:47:22 PM
in many cases you can get the same article that is in the expensive journal for free from an author's website.
Posted by: babar at Jun 29, 2009 11:54:54 PM
Question: if YouTube was a bank and had made 500M, wouldn't it still be eligible for TARP?
Posted by: Klug at Jun 30, 2009 12:14:35 AM
The example of the drug that costs $300,000 because development of a treatment for only 10,000 cost $500 million when combined with the question of how to control health care costs makes for an interested contrast and conflict.
While the private drug company thinks it deserves $300,000 a treatment, the private for-profit insurer will say no dice, leaving only a few patients rich enough to afford treatment. That means the drug company still loses money. So obviously, the drug company and patients lobby Congress to pay for the treatment. But that means the goverment pays $3B for a drug that cost $500M, which probably got government support because of its orphan drug status, and a lot of the basic research was NIH funded.
It would be better if the drug were free. The government contracting private companies to do drug development, paying maybe 80% of work in progress and then a 40% bonus on success would give the company $100M return on $100M success immediaely without having to wait until government pays for treatment. The patients get cured with insurers paying for treatment and drug manufacture, and the government saves $2B+, or $200,000 a patient.
Posted by: mulp at Jun 30, 2009 1:48:23 AM
Some times we could not open youtube from China. If youtube could fast speed in Asia, it will earn more money.
Posted by: chforging at Jun 30, 2009 3:44:19 AM
I found it amusing that the book Free cost $26.99.
“Free: The Future of a Radical Price” (Hyperion; $26.99);
Posted by: Rob at Jun 30, 2009 6:17:43 AM
Counting government grants that goes to pay for equipment, assays, and salaries I'd estimate the average biological journal value to be, say $100,000.
The journals are there for evaluation of the researchers and how they utilize the resources they are provided.
No free lunches today.
Posted by: Andrew at Jun 30, 2009 6:35:30 AM
