Wednesday, December 21, 2011


Version 0.3

Reactions to Free by Chris Anderson

Overall the book struck me as quite thought provoking and worth a careful reading. He gets you to think about many things in new ways, often with a powerful phrase that he throws off in passing. For example he throws off a comment about the ultimate personal value of memorable experiences and made me think of an entire business model built around exploiting local climates for off-season vacations centered around live musical events.

One of the recurring themes that bothered me was advertising. He clearly regards it as a benign influence and neutral source of funding, but he never seems to consider that advertising itself has negative externalities and hidden costs. It's most revealing to consider advertising from the perspective of the people making the ads. Do you really want to deal with a highly educated and well informed audience that will carefully and accurately assess every claim in your commercials? Or would you prefer couch potatoes who simply obey the fairly obvious commands to "buy this to be happy"? Or from the perspective of the providers of the goods and services, do you really want to spend the money to have the best quality in the market? Those last increments near the top of the quality scales tend to be quite expensive. There's a much higher RoI if you have adequate quality and use a few ads to create a perception of higher quality, and perhaps nurture the imaginary needs, too, thus creating demand where none would exist. Obviously I regard advertising as a rather corrupt foundation for any economic system. A certain amount of advertising can be a lubricant, but the main point of his "free" is to exploit free goods and services as alternative forms of advertising. To me, it seems too much like treating one disease with a more dangerous disease...

However, my main conclusion was that his understanding of economics is distinctly uneven. The word "free" is powerful marketing-speak, but the value still has to go somewhere. His recurrent mentions of "time" are actually quite significant, since time is the ultimate in non-fungible and scarce resources, but I concluded that the main thrust of the book was on ways to say "free" as in beer without really meaning it.

As is often the case, here are some notes and reactions as I went through the book:

Chapter 2 was supposed to be a treatment of the misunderstood word "free", but it basically didn't say much, and not just because it was a short chapter. The basic assumption was that "free" means free as in beer, at least for the purposes of this book. The important sense of free is "meaningful and unconstrained choice", and he scarcely addresses that at all.

On page 65 he talks about Zappos free shipping policy for shoes. He does mention the higher prices this leads to, but he didn't mention the obvious and much larger problems with the Web-based business model for shoes. Certainly the first things that came to my mind were questions like: "Where have these shoes been? How many times have they been returned? Did the previous people just try them on briefly or perhaps wear them around for an hour? Were their feet clean?"

On page 76 he writes "as certain as the fact we'd once dwelled in caves." In reality only a tiny fraction of homo sapiens ever lived in caves, and even for them the caves were probably just seasonal housing. There were other places where his basic knowledge of historical or anthropological facts seemed questionable, though I didn't flag them.

Page 82 he attributes a quote to Gordon Moore: "Moore's law is a violation of Murphy's law." (sic) The citation notes are unclear, but it doesn't appear in the Wikipedia article cited for page 82 nor is there any citation for page 81. However, what really struck me was that it's nonsense and shouldn't have been used at all. Murphy's Law says that anything that can go wrong will, but there is no way to construe or interpret Murphy's Law so that Moore's Law somehow becomes a violation. Even if Moore was so confused about Murphy's Law (which I strongly doubt), the confusion shouldn't have been reproduced here. I think I managed to dig up the video of the interview that was probably supposed to be the source (based on reports in other articles). However, when I listened to the video I didn't hear this quote. (If I missed it, please let me know where it was via a comment. It's a long video and my attention might have wandered at some point...)

On page 142 he mentions "near-zero marginal cost", but that mostly got me to thinking about the spam problem, which is never mentioned in the book, though it is the ultimate example of free unto death. The closest he comes is a closing reference to "You can't compete with free" on page 230. I think it noteworthy that spam has not-quite-entirely succeeded in destroying email-based marketing by legitimate businesses.

Page 166 mentions OSS, but his numbers belie his own claims of economic significance. The potential has always been FAR greater than the reality. However, it mostly reminded me of RACS (Reverse Auction Charity Shares), which I should send to him as a suggestion... The same page mentioned the failure of a bike-loaning system in Brussels, apparently due to the competitive interference of Clear Channel. Is that an international investment of the ultraconservative company of the same name, the one that owns all those right-wing talk radio stations in America? If so, then perhaps Clear Channel deliberately prefers that such a "socialistic" business model fail even if they have to sabotage it? The American company could certainly afford to write off their minor losses in killing the idea.

Page 192 was like page 76 in the twisted interpretation of science, though evolutionary biology this time rather than anthropology. Mostly reminded me of the Chinese Granny Amazons as an alternative resolution... He should read Dawkin's Blind Watchmaker. However, my basic response is that humans aren't blind and we don't have to be wasteful with random search. He actually writes that "scattershot strategies are the best way [for search]", which shows a basic misunderstanding of heuristic approaches. The natural evolutionary scattershot approach is for the eyeless genes driving backwards to the results. (However, this thinking helps explain his own large family, as mentioned in the acknowledgements.)

On page 218 he writes in praise of the now-defunct Sun Microsystems. Even though he praises Sun's understanding of "free", it obviously didn't work out very well and no longer counts as evidence in his favor.

Page 222 is similar to Chapter two. Here he considers privacy in relation to freedom. He is arguing that some advertisers are more respectful of individual privacy than others, but he again ignores the competitive pressures. Remember that the success criteria are encoded into laws by professional politicians owned by the least ethical businessmen, whose three main criteria are "bigger is always better", "only profit counts", and "damn the externalities". Most businessmen are much better people than that, but they are NOT the ones who are buying the politicians who are writing the new laws about who owns our personal information and what can be done with it. In addition, I felt that he doesn't appreciate the deep threats imposed by the abuse of such personal information. It isn't just that our weaknesses and vulnerabilities or past mistakes might be exposed and used against us, but even our tastes and strengths can be turned against us and used to manipulate us and take away our freedoms.

On page 239 he mentions new business models, which again reminded me of RACS... He also introduced the BizSpark marketing campaign from Microsoft, which is exactly like the drug dealer giving out free samples. Start your new business with "free" Microsoft software, and Microsoft will OWN your data no matter how large you become.

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