Posts about commodification

Geeks Bearing Gifts: The Pricing Paradox of Information

This chapter from Geeks Bearing Gifts deals with a fundamental strategic question for the future of news: Why does the information business suck? Does it need to? Yes, it does. Here’s the start of the chapter. You can read the rest here.

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In Adam Smith’s paradox of value, he wondered why, if water is vital to life and diamonds are not, diamonds are worth so much more than water. The pricing paradox of information presents a similar quandary: If information is so much more valuable to society than entertainment, why is it so hard to build a business — namely, journalism — around selling access to information? Journalism at its most useful is information-rich but information is quickly commodified. Entertainment, on the other hand, is unique and engaging and — for reasons I’ll explain in a moment — receives greater legal protection under copyright than information does. We have conflated journalism as an information business with entertainment as an engagement business in large part because both are are built on “stories.”

Information is less valuable in the market because it flows freely. Once a bit of information, a fact, appears in a newspaper, it can be repeated and spread, citizen to citizen, TV anchor to audience: “Oyez, oyez, oyez” shouts the town crier. “The king is dead. Long live the king. Pass it on.” Information itself cannot and must not be owned. Under copyright law, a creator cannot protect ownership of underlying facts or knowledge, only of their treatment. That is, you cannot copyright the fact that the Higgs boson was discovered at CERN in 2012, you can copyright only your treatment of that information: your cogent backgrounder or natty graphic that explains WTF a boson is. A well-informed society must protect and celebrate the easy sharing of information even if that does support freeloaders like TV news, which build businesses on the repetition of information others have uncovered. Society cannot find itself in a position in which information is property to be owned, for then the authorities will tell some people — whether they are academics or scientists or students or citizens — what they are not allowed to know because they didn’t buy permission to know it. Therein lies a fundamental flaw in the presumption that the public should and will pay for access to information — a fundamental flaw in the business model of journalism. I’m not saying that information wants to be free. I agree that information often is expensive to gather. Instead I am saying that the mission of journalism is to inform society by unlocking and spreading information. Journalism frees information.

Read the rest here.

If you can’t wait for the rest of the book, then you can buy it here.

30 Days of WWGD: What Google does to brands

Mike Masnick at TechDirt (via @mattcutts) is spot-on as he dissects Wall Street Journal managing editor Robert Thompson’s complaint on that sad Charlie Rose Flintstones show that Google devalues everything. Masnick argues – and I agree – that Google does precisely the opposite: It adds value.

Links are value. Content without links is valueless because it is unseen and cannot be monetized. Content with links gains value both because it has an audience that can be monetized and because it gains credence in Google PageRank, which equates links with value. That is the basic precept of the link economy.

I wonder whether what Thompson was trying to say instead was that Google devalues brands. I’ve argued lately that media thought their brands were magnets because we readers had to go to them, to find and buy their products. But now, those brands have to come to us. They must think distributed. This is how I lead off that chapter in the book:

Most companies think centralized, and they have since the decline of the Sears catalog and the dawn of the mass market. Companies make us, the customers, come to them. They spend a fortune in marketing to attract us. We are expected to answer the siren call of advertising and trudge to their store, dealership, newsstand, or now, web site. They even think we want to come to them, that we are drawn to them, moths to the brand.

Not Google. Google thinks distributed. It comes to us whenever and however it can.

When we discover a brand’s content – through search or links – the value of the brand is no longer that it drew us there but instead that it helps identify the content once we find it – as in, ‘Oh, yes, The New York Times has reporters and editors and so I know how to judge its content.’ Brands used to be magnets; now they are labels.

So Thompson’s subconscious complaint may instead be that Google devalues his brand as an independent determinant of value: ‘It’s in the Journal, therefore it will attract readers and advertisers.’ Now, instead, a brand’s content has to succeed in more of a meritocracy: the content has to be good enough to attract links and audience.

But sometimes – often – when people land on content through search, they find out what they want to find out and answer their questions and don’t notice what it was that gave them that. They got what they wanted via Google. That is the problem for media brands.

So here’s today’s What Would Google Do? snippet, from a chapter called, Google commodifies everything:

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In the earliest days of the web, I watched focus groups where users thought there was this amazing new company that had acquired all the content you could imagine about every subject possible, as if from the merger of a library, a newspaper, a magazine, and a weather service. That company was Netscape. It merely made the first commercial browser that took readers to those other companies’ sites. But Netscape got the credit.

Today, that amazing brand is Google. People go online looking for something, find the answer, and often don’t know where they found it. Google found it. They’re savvier today and know that Google doesn’t own all the content it links to. But that doesn’t matter, so long as they find what they want—and Google is damned good at that. That’s great for users but bad for brands. Here you work your buns off creating a brand online; you build technology and staff to maintain your site; you spend a fortune on marketing and search-engine optimization to get people to find it; you tell advertisers how many users come to your page and like your brand. But in the end, huge numbers of users don’t recall coming to your site and don’t credit your brand. When I worked on newspaper sites, we knew we had more users than the research said. The problem was, when users were asked where they had seen a piece of information that could have come only from us, they often couldn’t remember. Google found it for them. Google diluted our brands.

Google has turned commodification into a business strategy. Content is commodified: Google makes it just about as easy for you to find what I’ve written on a topic as what Newsweek has written. Once was, brands organized information but now Google does. Media are commodified: Google places marketers’ ads on sites without telling them where the ads will appear. It places those ads not as an ad agency would—on the basis of the audience size, demographics, trust, or value of a media brand—but on the coincidence of words on a page. The value of the ad depends only on how many people click on it. Thus the media brand behind the content where the ad appears becomes less critical and less valuable. Even the audience is commodified: There’s little that distinguishes one of us from another—not age, income, gender, education, interest, all the things advertisers historically paid for. Everybody’s like everybody else. We’re just users. We might as well be pork bellies. And advertisers are commodified: Their text ads look alike, without their expensive logos and brand messages. You’d think they’d object, but they don’t mind because they pay only for clicks. Google has cleverly reduced the risk in advertising, so advertisers let Google drive.

It isn’t all bad. The leveling of the playing field the internet and Google engineered also made it possible for a tiny store selling a niche product to find its ideal customer or for a mere blogger to swim alongside big, old media. But in that process, it’s ironic that our unique identities, personalities, brands, qualifications, interests, relationships, and reputations as publishers—the values the internet enables—can be lost even as we can be found via Google.

What do we do about the threat of commodification? One smart response is to play by Google’s rules and take Google’s money as has done. Or you can join networks with other specialized niches to reach critical mass, as has done. Or get people to link to you and talk about you because you’re just so damned good, as Apple does. Or place your ads on highly targeted sites where you know your customers are, sponsoring that mommy blog with free baby food for loyal readers. Develop a deep relationship with your constituents so they come back to you directly, not just through Google search but by using social services such as Facebook. Serve the niche well rather than the mass badly.