Free Doesn’t Mean Devalued:

The concept of zero took ages for societies to recognize, let alone understand. Mike has explained before how it’s been a stumbling block in economics for some libertarian and “free market” types more recently. People who think about economics in terms of scarcity get upset when abundance pushes price down towards zero, as if the economic equation were broken. But if you flip the equation and think of it as a cost of zero, you realize that the trick is to use as much of those abundant goods as possible, adding value to complementary scarcities for which you can charge. Zero doesn’t break economics, it just requires a different approach.

But artists and other creators hit a different stumbling block than libertarians (libertarian artists aside…). Zero is a problem because they feel like their art is worthless; they aren’t hung up on scarcity, they’re hung up on “devaluation.” We’ve heard it from journalists. I hear it most often from fellow songwriters. The economic theory makes them feel as though their work is just viewed as some sort of cheap commodity. The thing is, value and price are not the same. Price is monetary value, but value is so much more than money. Price is what gets driven down to marginal cost, but value factors into the demand side of the equation. Expensive things aren’t necessarily valuable, and valuable things aren’t necessarily expensive. I value oxygen a lot, but it seems silly to pay for the air I breathe each minute, given the abundant supply.

More importantly, songwriters who get hung up on “devaluation” confuse recordings with music. They equate the two. A recording is not the song, it’s just an instance of it, and a digital audio file is just an instance of the recording. Equating these reduces music to recordings to files. As important as recordings are, there’s so much more to music. When you think of a song, do you think of the recording, or a memory you had connecting with the music? Do you think of the file and how much it cost, or the emotions, people and experiences that the music conjures up? The recordings are just a means through which we experience the music. Songwriters (of all people!) should know that the value in music is so much more than the price of a recording. It’s not devaluing music to give it away for free, but it can increase its value by allowing more people to connect with it, to know, love and understand it — to value it. It’s through that experience that music is valued, not price!

Ironically, the underlying concern ends up being economic — how will we make money? A price of zero for digital audio files doesn’t mean that no one values the songwriting profession, or that no one is willing to spend money on music and keep songwriters in business. Sharing digital audio files makes the music more valuable and leads to more opportunities for monetization. When you give music away and connect with an audience, the opportunity for monetization is in the associated scarcities — access, containers, community, merchandise, relationships, unique goods, the creation of new music, etc. — by giving people a reason to buy. Getting hung up on “devaluation” is a distraction from the opportunity — the necessity — to experiment with new business models.

So, can we please stop complaining that free means devalued?

Check out the lively discussion in the comments. Also, usually I’m pretty obsessive with backlinks, but somehow I missed an obvious post worth a link: Free Doesn’t Mean Unpaid

Mike Masnick does a great job of explaining why some libertarian and “free market” types freak out when they see a zero dollar price tag. The concept of zero took ages for societies to even recognize, nevermind understand. It’s not a number, but the absence of a number. A stumbling block for mathematics and physics in the past, it’s now misunderstood in some economic circles. Economics is often defined by scarcity, but with digital goods and “intellectual property,” we have an infinite supply — abundance instead of scarcity. Prices gets pushed towards marginal cost in a competitive market, and these “infinite” goods have a marginal cost of zero… so that’s where the price gets pushed. This upsets some people, as if it were a “divide by zero” type error that breaks the equation.

But a lack of scarcity isn’t a problem. Instead of thinking of it as forcing a price of zero, you “flip the equation” and think of it as being a cost of zero. If something can be reproduced for free, the trick is to use as much of it as possible — give it away, leverage the abundance to add value to other complementary scarce goods. Zero doesn’t break economics, it just requires a different approach. (This is all just a condensed version of Mike’s post.)

Songwriters, however, hit a different stumbling block than libertarians (songwriting libertarians aside…). Zero is a problem because they feel like their music is worthless; they aren’t hung up on scarcity, they’re hung up on “devaluation.” A lot of artistic types hear the economic theory and feel as though their work is just viewed as some sort of cheap commodity.

The thing is, value and price are not the same. Price is monetary value, but value is so much more than money. Price is what gets driven down to marginal cost, but value factors into the demand side of the equation. An expensive thing isn’t necessarily a valuable thing, and something that’s available for free isn’t necessarily without value. I value oxygen a lot, but it seems silly to pay for the air I breathe each minute, given the abundant supply.

More importantly though, songwriters who get hung up on “devaluation” confuse recordings with music. They equate the two. A recording is not the song, it’s just an instance of it, and a digital audio file is just an instance of the recording. Equating these reduces music to recordings, to files. As important as recordings are, there’s so much more to music. When you think of a song, do you think of the recording, or a memory you had connecting with the music? Do you think of the file and how much it cost, or the emotions, people and experiences that the music conjures up?

When I listen to Reflection, I am in Rosedale Valley, running a cross country practice in Grade 11 with a friend, as the meaning of the final verse hit me in all its pain and glory. When I listen to Dispatch live albums, I’m at the Hatch Shell in Boston, or Madison Square Gardens, at one of the reunion concerts. When I listen to the Good Lovelies, I’m in Ottawa at the OCFF conference in a packed hotel room full of folk musicians listening to a raw, passionate acoustic performance. You don’t connect with the files, you connect with the music. The recordings are just a means through which we experience the music.

I would hope that songwriters, of all people, could realize that the value in music is so much more than the price of a recording. It’s not devaluing music to give away your music for free, but rather increasing its value by allowing more people to connect with it, to know, love and understand it — to value it. It’s through that experience that music is valued, not price!

Furthermore, a price of zero for digital music doesn’t mean that no one values the profession, or that no one is willing to spend money on music and keep songwriters in business. When you give music away and connect with fans, the business opportunity is to monetize the associated scarcities — access, containers, community, merchandise, relationships, unique goods, the creation of new music, etc. — by giving fans a reason to buy.

Music still has value, and there are still plenty of ways to monetize it. Getting hung up about “devaluation” is a distraction from the opportunity and the need to experiment with these new business models. Recognizing that digital recordings are an infinite good and giving them away for free only makes the music more valuable, and only leads to more opportunities for monetization.

So, can we please stop complaining that freeing up music devalues it?