A number of links are now floating about the Internet about Malcolm Gladwell‘s review of Free, the book by Wired Editor-In-Chief Chris Anderson. Another review, in the Financial Times, by John Gapper, also does not come out so strongly in favor of the economics advocated by Anderson.
The reviews are essentially critiques of the Freemium Model of Internet businesses. (For those not familiar- the implanted advertisements sold by Google.) The central argument point around these debates, especially the debate that is continuing between Mr. Anderson and Mr. Gladwell, is what is the true cost of information on the Internet, as the price of both hardware and programs keep dropping. Further complicating this debate is that there are allegations thrown in the blogosphere background that Chris Anderson plagiarized from the bastion of free information, Wikipedia.
Of the links available, one of the noticeable features lacking in the debate at hand is the lack of differentiation of the costs between knowledge, information, and time, and their relationship to their market price and market demand. Creating a sphere that differentiates these costs in order to develop an accurate model of the economy of information and its surrounding goods (the essential premise of the book Free) would greatly clarify the situation.
To that end, from I can tell, at its heart, the freemium model works if one comes to understand the following idea: Time is a precious luxury, information is like sand, and knowledge a jewel found in the sand, but only with time.
Joseph Stiglitz, Nobel Prize and Clark Medal winner for his work on Information Economics, came up with many of the concepts that we know of today through his work about information and screening in a world of imperfect knowledge. His work, especially his book Whither Socialism (Which I happen to be in the middle of: it is among the most difficult non-fiction books I have ever read.), are among the most effective critiques of the Walrussian economic system that we in the West want to base our financial models off of. His work on signalling is particularly important-if you know something more- will you get a better deal?
The answer is invariably yes. However, there is one glitch in this entire model: The sum total of informations gets dated very quickly in this model (which from I have been reading, he does admit.). This is due to information mutating into new forms as it gets passed from person to person, some of which survive as totally separate pieces of information. What does not get dated: Knowledge, or the sum total of valuable information that seems to be in use all the time. If one has a hard time understanding the difference here is an an example: Understanding how objects are used in object oriented program currently is a timeless bit of knowledge, whereas understanding Java is a form of information- Java could become quickly outmoded if some language that is also object oriented is developed that works better comes into play. As a result, being the person with the best quality information that can be turned into knowledge is extraordinarily difficult, and in some cases, not even possible. It is a huge time and/or money investment.
As a medium, the idea of a gross network and the Internet radicalized information and its transmission. The rate at which information passes through its economic ecosystem is now very fast- but time has stayed the same. As a result, the process to acquire a particular kind of knowledge has shot up in cost of time and m0ney. Previously, the cycle of information over time limited the mutations available to an individual. Now we are surrounded by an abundance of information that keeps growing- and we still all need to seek knowledge.
The traditional Walrussian model would show that over time, the supply-demand curves for knowledge and information having been moving sharply away from each other. It is why software companies that make amazing products become behemoths.
What we really pay for, whether through ads, or through freemium means, or other business models that exist on the Internet, is knowledge. Information, after all, is really cheap.
The Price of Freemium
A number of links are now floating about the Internet about Malcolm Gladwell‘s review of Free, the book by Wired Editor-In-Chief Chris Anderson. Another review, in the Financial Times, by John Gapper, also does not come out so strongly in favor of the economics advocated by Anderson.
The reviews are essentially critiques of the Freemium Model of Internet businesses. (For those not familiar- the implanted advertisements sold by Google.) The central argument point around these debates, especially the debate that is continuing between Mr. Anderson and Mr. Gladwell, is what is the true cost of information on the Internet, as the price of both hardware and programs keep dropping. Further complicating this debate is that there are allegations thrown in the blogosphere background that Chris Anderson plagiarized from the bastion of free information, Wikipedia.
Of the links available, one of the noticeable features lacking in the debate at hand is the lack of differentiation of the costs between knowledge, information, and time, and their relationship to their market price and market demand. Creating a sphere that differentiates these costs in order to develop an accurate model of the economy of information and its surrounding goods (the essential premise of the book Free) would greatly clarify the situation.
To that end, from I can tell, at its heart, the freemium model works if one comes to understand the following idea: Time is a precious luxury, information is like sand, and knowledge a jewel found in the sand, but only with time.
Joseph Stiglitz, Nobel Prize and Clark Medal winner for his work on Information Economics, came up with many of the concepts that we know of today through his work about information and screening in a world of imperfect knowledge. His work, especially his book Whither Socialism (Which I happen to be in the middle of: it is among the most difficult non-fiction books I have ever read.), are among the most effective critiques of the Walrussian economic system that we in the West want to base our financial models off of. His work on signalling is particularly important-if you know something more- will you get a better deal?
The answer is invariably yes. However, there is one glitch in this entire model: The sum total of informations gets dated very quickly in this model (which from I have been reading, he does admit.). This is due to information mutating into new forms as it gets passed from person to person, some of which survive as totally separate pieces of information. What does not get dated: Knowledge, or the sum total of valuable information that seems to be in use all the time. If one has a hard time understanding the difference here is an an example: Understanding how objects are used in object oriented program currently is a timeless bit of knowledge, whereas understanding Java is a form of information- Java could become quickly outmoded if some language that is also object oriented is developed that works better comes into play. As a result, being the person with the best quality information that can be turned into knowledge is extraordinarily difficult, and in some cases, not even possible. It is a huge time and/or money investment.
As a medium, the idea of a gross network and the Internet radicalized information and its transmission. The rate at which information passes through its economic ecosystem is now very fast- but time has stayed the same. As a result, the process to acquire a particular kind of knowledge has shot up in cost of time and m0ney. Previously, the cycle of information over time limited the mutations available to an individual. Now we are surrounded by an abundance of information that keeps growing- and we still all need to seek knowledge.
The traditional Walrussian model would show that over time, the supply-demand curves for knowledge and information having been moving sharply away from each other. It is why software companies that make amazing products become behemoths.
What we really pay for, whether through ads, or through freemium means, or other business models that exist on the Internet, is knowledge. Information, after all, is really cheap.
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