For the upcoming release of my new iPhone app, ChemTrix Elements.
This post was originally published in The Photon Fantastic on May 5th, 2010. It's the companion piece to The Relentless Commoditization of Content. It appears here in slightly modified form.
In May, 2010, I traveled to Tofino, a small fishing and whale watching town on the west coast of Vancouver Island. Along the way, I took photographs of sea and mountains and forests, and had a lot of time to chat with my good friend and guide, Kirk, about the business of photography and writing. (All of the photographs shown in this post were taken on the trip.) When I returned to Vancouver and an internet connection, I was particularly struck by a poignant blog post by late film critic Roger Ebert. He wrote:
This is a golden age for film criticism. Never before have more critics written more or better words for more readers about more films … Twenty years ago a good-sized city might have contained a dozen people making a living from writing about films, and for half of them the salary might have been adequate to raise a family. Today that city might contain hundreds, although … not more than one or two are making a living. Film criticism is still a profession, but it’s no longer an occupation. You can’t make any money at it.
Now go back and read that again, but this time, replace every instance of the word “film” with “photography.” The statistics Ebert guesses at probably aren’t the same for the two pursuits — I surmise that fewer people have made a living writing about still photography than about moving pictures — but the general argument holds for both: the internet has ushered in a great democratization of information generation — not just about film and photography, but about every conceivable topic. Anyone with an interest in a subject and access to the internet can use free tools to publish free information for a potentially enormous audience.
Wikipedia defines a commodity as a good for which there is demand, but which is supplied without qualitative differentiation across a market. Typical commodities are products like copper and wheat. Because a commodity is the same no matter who produces it, it is “fungible,” or interchangeable with another product of the same type. To a first approximation, copper is copper is copper, no matter who refined it; and wheat is wheat is wheat, no matter who grew it. Therefore, the price of a commodity is insensitive to brand — it’s based solely on supply and demand: the higher the demand, or lower the supply, the higher the price.
If you squint a little, there isn’t much difference between copper and text on a computer screen, or between wheat and images on a web page. The internet has made information — words and pictures — as much a commodity as copper, or wheat. There are huge numbers of people writing on an enormous variety of topics — so much so that even the best, expert writers are largely undifferentiated and therefore fungible. In the context of film criticism, it won’t matter much whose reviews you read, even if you are picky about quality: the web ensures that you have a large number of excellent, reliable, and entertaining sources, all of which are equally satisfactory.
In economic terms, information on the web has been “commoditized,” which is a word used to describe the transformation of a market from one in which products are differentiated to one in which they are undifferentiated through increased competition. This typically results in lowered prices. It is for this reason that companies are always adding new features to their products or services. Only by differentiating its goods from its competitors’ can a company lift them out of the morass of commoditization and therefore command a higher price. Once a feature has been adopted across the board by all manufacturers, it ceases to differentiate one brand from another and the financial benefit brought by that feature drops towards zero. (This doesn’t mean that manufacturers can cease adding the feature; it means that the feature has become essential and taken for granted by the consumer. The manufacturer would to well to find ways to decrease the cost of the feature commensurate with its declining value.)
In practical terms, the price of most information on the internet has already been driven to zero by commoditization. This has caused a lot of pain for a lot of people who formerly relied for their livelihoods on access to privileged information. Consider, for example, what the internet has done to middle men like travel agents or stock brokers. In Canada, real estate agents are now also in the crosshairs (but are fighting back vigorously). Writers, the people who provide the very stuff that makes the web valuable, have themselves become valueless at the individual level. (And so have photographers.)
To explain this from a different perspective, we turn to Joel Spolsky, a software developer based in NYC. He writes:
Every product in the marketplace has substitutes and complements. A substitute is another product you might buy if the first product is too expensive. Chicken is a substitute for beef. If you’re a chicken farmer and the price of beef goes up, the people will want more chicken, and you will sell more.
A complement is a product that you usually buy together with another product. Gas and cars are complements. Computer hardware is a classic complement of computer operating systems. And babysitters are a complement of dinner at fine restaurants. In a small town, when the local five star restaurant has a two-for-one Valentine’s day special, the local babysitters double their rates.
All else being equal, demand for a product increases when the prices of its complements decrease.
Free content is the fuel (complement) that makes the web valuable. In order to provide free content, websites will do everything possible to commoditize the writers, photographers, videographers, musicians, and animators who provide this content. Why do you think that the idea of user-generated content caused such a stir among mainstream media in 2005? Was it because the BBC and Fox News embraced the rise of the “citizen journalist” as a good idea in principle? Or was it because it made cold, hard economic sense to shift from the expensive process of creating new and original content to providing facilities for amateurs to publish their own? (Think of the difference between scripted drama and reality TV — which is less expensive and more prevalent?) Social networking sites take user-generated content to the extreme. In March of this year, Facebook surpassed Google for the first time as the most visited site in the US. Approximately 200 million of its 400 million account holders log in to Facebook each day to spend an average of one hour consuming content that was created not at great expense by the proprietors of the site, but for free by its end users.
And let’s not forget Facebook’s terms of service, which includes this rather questionable bit about the content you made and received no payment for: “For content that is covered by intellectual property rights, like photos and videos (‘IP content’), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (‘IP License’). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.” (1)
These generalities hold true because the typical entrepreneur is spurred into action by a low barrier to entry. If you like, barriers to entry and going into business for yourself are complements. The lower the cost of set-up, the greater the demand for entrepreneurship. Why else do you think that this world is replete with massage therapists, hairdressers and wedding photographers?
And bloggers like myself. Let me repeat: Anyone with an interest in a subject and access to the internet can use free tools to publish free information for a potentially enormous audience. Which is why there are so many bloggers “in business.” Please note, however, that although blogs may be free to read, they are not free to write. There is an enormous opportunity cost to writing a great blog on a daily basis. Roger Ebert tells the story of James Berardinelli, who is “among the half dozen most-read critics in the world.” Berardinelli holds a day job as an engineer because his site, reelviews.net, popular though it is, does not support him. “The studios and other industry advertisers don’t give a damn about film criticism, preferring to direct most of their online ad budgets to celebrity and gossip sites.” Berardinelli told Ebert that “his Amazon resale commissions helped to offset his out-of-pocket costs,” nothing more. The prognosis is not good for those of us wanting to turn blogging into a living. If Facebook, with 200 million visits daily, has trouble coming up with a reasonable business model, what chance do we have?
For writers of any persuasion, myself included, now is a precarious moment. It may indeed be, as Roger Ebert contended, the golden age of film criticism, but it is far from the golden age for the critic herself.
- These terms were current in May, 2010. I have not looked at them since.
- As of May, 2010. It appears now that Facebook does indeed have a viable and very profitable business model – which is predicated on your personal information!