"Free" and membership

Time to pay up for the wonders of the economy of "free". Become an openDemocracy Friend or Member
Tony Curzon Price
Tony Curzon Price
21 November 2011

The economics of "free" is with us still. Some of the most recognisable brands of today, companies to whom we entrust huge amounts of our time, data, even private selves have been built in the last decade on the basis of "free". Facebook, Google, any number of apps and publications have discovered that there is something irresistible about the price "zero".

Of course, the irresistibility does not extend to everything that these companies produce. They would not quite be such darlings of the investment world if they were. This is always the economics of "free with a sting". Payment is extracted. In colloquial French, after a particularly hearty meal in a restaurant and once you had downed "le digestif" (nothing of the sort - a shot of pure alcohol certainly won't help your stomach), you might ask the waiter for "la douloureuse" - the bill. The meal is part of the economics of free until after you have consumed it.

We have also become more aware of the sting, of la douloureuse, in the digital smörgåsbord that feeds our infovorous lives. When I heard economists first discussing the Google pricing model of "free", they liked to see it as an extreme case of "Price Discrimination" - a provider selling a good at different prices for different groups of customers. There is no material difference between a business class seat on short haul flights and an economy seat. But you can split your customers by offering ticket flexibility and such perks. This alllows you to charge more than the extra cost of the perks to those with a higher willingness to pay. It has long been known - and has been a favourite of the international trade dumping and the anti-trust literature that it is even sometimes commercially sensible to drop costs to one group below the cost of production. In the case of "Free", economists wanted to hang on to the notion that even in the absence of their favourite social fiction, the price, their theories were still relevant.

It was this year that I first read the brilliant encapsulation of what is really going on, though. On August 26th 2010 at 1.41pm, blue_beetle posted a one sentence comment on an article in MetaFilter that trickled its way around the world: "If you are not paying for it, you're not the customer; you're the product being sold." It should have come from a long-toothed ad-exec on Maddison Avenue or a marketing guru at Harvard Business School. But almost belying its own content, blue-beetle has encapsulated in gallows humour our predicament. Somehow, the economist's view that this is price discrimination, normal customer relations by other means, is meant to reassure, to hide us from a reality we might otherwise resist - that the traces left by the infovore in the world of free are being eaten by the big-data behemoths of Web2.0.

And maybe there is nothing too much wrong with that. I certainly feel that my deal with Google is a good one. An extraordinary range of services in exchange for occasionally usefully targeted advertisements. (Though why Google is now serving me up loan advertisements is a worry ... does it predict something in my future that I have not yet seen?). Even Facebook served me an ad I liked the other day. The exchange here is simple and I'm pretty comfortable with it.

This is also the year, however, when we have learnt through the News International scandals, the degree to which the business of providing information can transform the information provided. Hacked stories of celebrity and sensation were offered as news because the business required the political access that a mass audience fed on sensation, prurience and outrage could provide. This was a pre-web example of those who were apparently the customer, being, unbeknownst, the product.

So this is the circle that openDemocracy is determined to square:

  • to remain free to read
  • not to allow our business model to shape the product we offer
  • not to turn our readers into the product - not to "sell our audience"

And, slowly, we are succeeding. The secret of the model is, satisfyingly, the exact opposite of price discrimination: it asks those who can pay to pay for everyone else. And it is meant to be exactly the opposite of "la douloureuse": you should feel good that you are making this particular circle squarable.

What a properly functioning democracy will need is a society where each citizen is aware of their impact on all others and acts with regard to the whole, including themselves. What a properly functioning "free" media needs is the same. What openDemocracy needs is for all of us including you - the sort of reader who reads and gets to the end of the articles we publish - acting together to become a Member or a Friend. Becoming the future of "free" needs to be something we do together. It means  pay up! And what feels right about openDemocracy's call to you in this case is that it is a call on your judgement. Pay up for yourself, pay up for others, pay up for the idea and its improvement, and pay up what you feel this is worth given your circumstances.

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