Information Wants to Be Shared. Joshua Gans

practice of offering to sell goods in different forms (e.g., flights sold with big seats and those sold with cramped seats). Considered in this light, the medium is as important as the message. Indeed, the two are perfect complements. Charging for the information itself or charging for the means by which it reaches consumers, or both, is just like charging for delivering a physical good to your doorstep: the payment involves both the good and the delivery.

      This leads naturally to a possible conclusion that not only does information want to be free but that “information is free”; it’s the delivery you pay for. Traditional booksellers are competing with electronic booksellers to sell books. And, for the most part, what they are competing on is the form of delivery and the way the books are packaged. Each of these is competing with completely free versions supplied by libraries or friends and spouses who don’t take too long to read. Even then, if you consider the books you download on a Kindle as “not free,” consider that the cost of the book may, in fact, just be accounting for a low-priced Kindle.

      The point here is that publishers and other content providers can benefit from envisaging what their business models would look like if they considered themselves in the delivery business rather than the information business. In other words, if information were actually free, how would they provide value to consumers that consumers would pay for?

      Is Free Enough?

      Free distribution implies that the value of information would be maximized if everyone who wanted to could consume it and that this should be our goal. Moreover, the value created by widespread consumption is critical in justifying costs associated with creating that information.

      The free information approach proposes that the mechanism by which full value can be realized is to set a price at zero and allow people to take what they want. But does that really do the job? After all, just because information is freely available does not mean it is actually consumed. And without consumption, information’s value to any one individual is zero. What the mechanism of free information neglects is that information still must compete for attention—a precious commodity difficult to snare in a world of abundance. Offering information for free is not sufficient to achieve that goal, ignoring as it does a core feature of information: it’s hard to know what the value of information is. To ensure information reaches those who value it requires something more. Consequently, to understand what information really wants, we need to divorce the goal (information to all) from the mechanism (free takings).

1. See http://en.wikipedia.org/wiki/Information_wants_to_be_free.

2. The most notable of these is Chris Anderson, Free: The Future of a Radical Price (New York: Hyperion, 2009). The most famous skeptical response is from Malcolm Gladwell, “Priced to Sell. Is Free the Future?” The New Yorker, July 6, 2009. Ironically, as of the writing of this book, Gladwell’s article can be accessed for free, while Anderson’s book is behind a paywall.

3. Mike Scherer documented this phenomenon for classical music in the nineteenth century. See F. M. Scherer, Quarter Notes and Bank Notes: The Economics of Music Composition in the Eighteenth and Nineteenth Centuries (Princeton, NJ: Princeton University Press, 2003).

4. The most careful study to date has been conducted by Joel Waldfogel, “Bye, Bye, Miss American Pie? The Supply of New Recorded Music Since Napster,” working paper 16882, NBER, 2011. He finds that, whatever the negative impact piracy has had on the music industry revenues, the supply of creative works is the same as it was before digital technologies were available.

5. At the time of writing, Fleetwood Mac’s Rumors was selling for $7.92 as an album on iTunes with some singles (e.g., “Gold Dust Woman”) selling for $0.99 and others (e.g., “Don’t Stop”) selling for a massive 30 percent more.

6. As I will elaborate on later, when different consumers value different songs on an album but sellers cannot tell who values what, then selling the bundle is more profitable than selling songs individually. Yannis Bakos and Erik Brynjolfsson, “Bundling Information Goods: Pricing, Profits and Efficiency,” Management Science 45, no. 12 (1999): 1613–1630.

7. And consider too the consumer who purchased a legitimate DVD, only to be subjected to an ad warning against piracy every time she viewed it.

8. One could go on. According to Cory Doctorow, “If you’ve paid for a movie ‘rental’ that expires ten minutes before you finished watching it because you had to tend to the baby, you might feel you have the ethical right (if not the legal one) to torrent that movie and finish it off. Or if you’ve bought a movie once on DVD and you want to watch it while you’re on the road, you might feel justified in downloading it. Licence payers who find themselves abroad and locked out of the BBC’s iPlayer might feel like they’ve paid for the right to download the shows they’ve paid for from an unauthorised source” (http://www.guardian.co.uk/technology/gamesblog/2011/apr/20/digital-free-persuade-pay-cory-doctorow). My cable provider offers on-demand TV shows but disables functions on the remote to stop ad skipping. That is all well and good, but at the same time it disabled “pause.” It basically is begging me to use compulsory ad breaks to go to the bathroom!

9. Paul Graham, “Post-Medium Publishing,” September 2009, http://www.paulgraham.com/publishing.html. In fact, I wrote about a similar idea in February 2009, “Psst, No One Has Ever Sold Information,” http://economics.com.au/?p=2658.

10. Ibid.