Seth Godin's Blog, page 242

The game theory of discovery and the birth of the free-gap

It all started because of the discovery problem.

Too many things to choose from, more every day. No efficient way to alert the world about your service, your music, your book. How about giving it away to help the idea spread?

The simplest old school examples are radio (songs to hear for free, in in the hope that someone will buy them) and Oprah (give away all the secrets in your book in the hope that many will buy.)

There's a line out the door of people eager to spread their ideas, because in a crowded marketplace, being ignored is the same as failure.

Most people, most of the time, don't buy things if there's a free substitute available. A hundred million people hear a pop song on the radio and less than 1 percent will buy a copy. Millions will walk by a painting in a museum, but very few have prints, posters or even inexpensive original art in their homes. (In the former case, the purchased music is better--quality and convenience--than the free version, in the latter, the print is merely more accessible, but the math is the same--lots of visits, not a lot of conversion).

We don't hesitate to ask a consultant or doctor or writer for free advice, but often hesitate when it involves a payment. ("Oh, I'm not asking for consulting, I just wanted you to answer a question...") And yes, I'm told that some people cut their own hair instead of paying someone a few bucks to do it.

None of this is news. Two things have changed, though:

1. As more commercial activity involves digital goods (websites, ebooks, music, etc.), the temptation to spread the idea for free (to aid discovery) is actually economically possible--if you believe that the free spread will lead to more revenue in the long run. The cost of a single copy is zero, so you can choose to set the digital item loose without bankrupting yourself.

2. A culture of free digital consumption has evolved and is being adopted by a huge segment of the most coveted consumers (teenagers, the educated, the upper middle class).

The bet a creator makes, then, is that when she gives away something for free, it will be discovered, attract attention, spread and then, as we saw in radio in 1969, lead to some portion of the masses actually buying something.

What's easy to overlook is that a leap is necessary for the last step to occur. As we've made it easier for ideas to spread digitally, we've actually amplified the gap between free and paid. It turns out that there's a huge cohort that's just not going to pay for anything if they can possibly avoid it.

Radio thirty years ago was simple: everyone hears it for free and a few buy it.

For a time, one could use free to promote an idea and have leverage to turn that attention into paid sales of a similar item (either because free went away or because the similar item offered convenience or souvenir value).

I think that might be changing. As the free-only cohort grows, people start to feel foolish when they pay for something when the free substitute is easily available and perhaps more convenient.

Think about that--buying things now makes some people feel foolish. Few felt foolish buying a Creedence album in the 1970s. They felt good about it, not stupid.

This new default to free means that people with something to sell are going to have to push ever harder to invent things that can't possibly have a free substitute. Patronage, live events, membership, the benefits of connection--all of these things are outside the scope we used to associate with the creative business model, but that's changing, fast.

Lada Gaga's music is basically free. It's the concerts that cost money. McKinsey's consulting philosophy is free in the library, it's the bespoke work that costs money. Watching a movie on Netflix is free--once you pay to belong. Playing golf at the local public course is pretty cheap, it's membership in the fancy club that costs money...

There's a growing disconnect between making something worthwhile and getting paid for it. The digital artifact is heading toward free faster and faster, and the inevitable leap to a paid version of the same item is going to get more difficult.

Creators don't have to like it, but free culture is here and it's getting more pervasive. The brutal economics of discovery combined with no marginal cost create a relentless path toward free, which deepens the gap. Going forward, many things that can be free, will be.

[Worth a side note to talk about the 'shoulds'. Some commentators have argued quite forcibly that things shouldn't be free, that creators should always be paid, that 47% of our economy is based on intellectual property...

Of course, free has always been part of the equation. These commentators, the ones arguing in interviews or in blog posts, are already sharing their ideas for free. The bestselling book of all time has no copyright and has been shared freely for thousands of years. Musicians gladly show up to play for virtually free on American Bandstand or the Tonight Show.

Most ideas have never been something one could monetize. The inventor of the knock knock joke, for example, or the two college kids who coined Six Degrees of Kevin Bacon have put ideas into the ideastream, and they spread without much thought for cash compensation.

I'm certainly not arguing that content should be free, it's clear that the argument on the either side isn't absolute. My argument is that the line for using free as a discovery tool is shifting, and the best (and perhaps only) way to monetize in the future is for the idea to be encased in something that could never realistically be free. Prorducts and services with a marginal cost of more than zero, for example.

Should consumers be willing to pay for great content? You bet. In fact, paying for content is a great way to ensure that more of it gets made.

Does the game theory of the market make it likely that those in search of discovery will accelerate the use of free to get attention? Of course.

Creators have trained the most coveted, biggest spending and intelligent portion of the market to expect that many digital items will be free. Now it's up to us to wrap those items in such a way that they're worth paying for again.]

Which of the four are getting in the way?

You don't know what to do

You don't know how to do it

You don't have the authority or the resources to do it

You're afraid

Once you figure out what's getting in the way, it's far easier to find the answer (or decide to work on a different problem).

Stuck is a state of mind, and it's curable.

Which of the four are getting the way?

You don't know what to do

You don't know how to do it

You don't have the authority or the resources to do it

You're afraid

Once you figure out what's getting in the way, it's far easier to find the answer (or decide to work on a different problem).

Stuck is a state of mind, and it's curable.

The taskmaster premium

How much are you paying for the privilege of having someone else tell you what to do?

Example: if you go to your gym and work out for an hour, the cost of that session is zero.

Hire a personal trainer to follow you around and give you instructions and that's $70.

If you take a job as a freelancer writer doing short service pieces on assignment to a local paper, you might earn $3 an hour. Which is about 97% less than you'd earn if, like some writers, you dream up amazing pieces, write them on spec and turn them into blogs, books or films. This writer doesn't wait to get hired. He hires himself.

If you do publicity for an agency, working hard and precisely following the VP's and the client's instructions, you might earn $25 an hour. On the other hand, when you do your own PR, when you build a sensation and turn it into a following, you might earn many times that. (And enjoy it more).

Work for a coal mine and make minimum wage. Discover a coal mine and never need to work again.

We happily give up our freedom and our income in exchange for having someone else take responsibility for telling us what to do next.

How much are you giving up?

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Irrational vs. unreasonable

Customers and team members make irrational requests all the time.

That doesn't make them unreasonable. If satisfying their request moves things forward, it's not always worth the effort to teach someone a lesson. Sometimes, it's more effective to just embrace their irrationality.

Being right doesn't always have to be the goal.

Are you a scientist?

Scientists make predictions, and predicting the future is far more valuable than explaining the past.

Ask a physicist what will happen if you fire a projectile like this in that direction, and she'll know. Ask a chemist what happens if you mix x and y, and you'll get the right answer. Even quantum mechanics mechanics can give you probabilities that work out in the long run.

Analysts who come up with plausible explanations for what just happened don't help us as much, because it's not always easy to turn those explanations into useful action.

Take the layout of Craigslist. Just about any competent online designer would have predicted that it would fail. Too clunky, undesigned, too many links, not slick or trustworthy... Or consider a new r&b artist, or a brand new beverage.

After the fact, it's so easy to say, "of course it worked..." and then make up a reason for whatever it is that just succeeded.

The practice, then, is to start making predictions. In writing. You don't have to share them in public, but the habit will push you to understand your instincts and to sharpen your ability to see what works (and what doesn't) without the easy out of having to explain what already happened.

Look at startups or political campaigns or new products or ad campaigns... plenty of places to practice your predicting skills.

I predict you'll learn two things:

It's really difficult to make predictions, because success often appears to be random

Based on #1, it's probably smart for you to initiate more projects that aren't guaranteed winners, because most winners aren't guaranteed.

And a bonus... the more you practice your predictions, the better you'll get at discerning where the science is.

If you're going to work...

work hard.

That way, you'll have something to show for it.

The biggest waste is to do that thing you call work, but to interrupt it, compromise it, cheat it and still call it work.

In the same amount of time you can expend twice the effort and get far more in exchange.

Selling nuts to squirrels

In All Marketers Tell Stories, I argue that most organizations shouldn't try to change the worldview of the audience they're marketing to.

Worldview is a term popularized by George Lakoff. It's the set of expectations and biases that color the way each of us see the world (before the marketer ever arrives on the scene). The worldview of a 45 year old wine-loving investment banker is very different from that of a fraternity brother. One might see a $100 bottle of burgundy as both a bargain and a must-have, while the other might see the very same bottle of wine as an insane waste of money.

Worldview changes three things: attention, bias and vernacular. Attention, because we choose to pay attention to those things that we've decided matter. Bias, because our worldview alters the way we filter and interpret what we hear. And vernacular, because words and images resonate with people differently based on their worldview.

It's extremely expensive, time consuming and difficult to change someone's worldview. The guys at Opus One shouldn't spend a lot of time marketing expensive wine to fraternities because it's not efficient. Sell nuts to squirrels, don't try to persuade dolphins that nuts are delicious.

There's an exception to this rule, and that's the necessity of changing worldviews if you want to become a giant brand, a world changer, a marketer for the ages. Starbucks changed the way a significant part of the world thought about spending $4 for a cup of coffee.

Or consider Facebook. It started by selling nuts to squirrels. At first, Facebook was social crack for lonely (all college students are lonely) college students. Over time, the social pressure it created snuck up on and surrounded those with a different inclination, those that would never have signed up on their own. These folks had a worldview that privacy was valuable and that time was better spent elsewhere. But once a sufficient number of their friends and colleagues were online, they felt they had little choice. Converting those people (often against their short term wishes) is where Facebook's most recent 300 million users came from.

 

The interesting truth in both the Starbucks and Facebook example is that a different worldview was at work. The latecomers to each company were sold a very different story--the story of, "you need to be here because all your friends are." That worked because it matched the latecomers' worldview, the one that includes an imperative, "don't be left out." Different nut, same squirrel.

"Don't tell me what I can't have" (unraveling a paradox)

In the USA, it's quite alright for media to talk endlessly about all the things the typical person can't possibly afford. Cribs, jets, jewels, dinners with Jennifer Aniston.

At the same time, you're guaranteed to get negative feedback when you talk about things people have chosen not to have. If you tout a great product that only works on a Mac or a Kindle or on Android or in Norway, all the people who have chosen to use a different piece of tech or live in a different country get angry, that special kind of angry that belongs to the pampered. It's not that they don't want to buy it, it's that they don't even want to know that it's for sale.

The reason, I think, is that you're reminding people of a decision they made, a decision that might have felt right at the time, but when they made it, they didn't know about what you've got on offer. They actively decided to take themselves out of the running for this magic event, this extraordinary product, and marketing it to them belittles their choice.

The market tells us that there's a big difference between "don't tell me what I can't have," and "don't tell me what I've chosen not to be able to have."

Dreaming of winning the lottery is fine, apparently, while experiencing pangs of regret over a decision is not.