Josh Kaufman

Josh Kaufman is the bestselling author of books on business, entrepreneurship, skill acquisition, productivity, creativity, applied psychology, and practical wisdom. About Josh »

Everything 'Free' is Subsidized

There’s a fierce battle of the titans raging across the interwebs about the market value of non-physical assets, like information and computer files. How much is an MP3 or PDF really worth? What is the value of the text on the front page of the New York Times? Who is going to pay journalists to do what they do every day, in a world where journalism is expensive and information is cheap?

Chris Anderson, editor of Wired magazine and author of Free, is of the opinion that, “In the digital realm you can try to keep Free at bay with laws and locks, but eventually the force of economic gravity will win." (Source) Anderson believes that the natural price of things that are abundant is zero, and information can be copied ad infinitum for so little that it becomes essentially free. Instead of fighting it, journalists and rock bands alike should embrace the attention-grabbing qualities of free value and focus on charging for things that are scarce, like private events and concert tickets.

Here’s why this debate matters: everything “free" is actually subsidized. It’s just not always apparent where the subsidy is coming from.

What’s a Subsidy?

A subsidy is the financial support of one activity via another. Journalists don’t make money directly from going out and investigating stories: in fact, taking money from an individual or company they’re covering is a serious breach of professional ethics. In order to pay for journalists, newspapers and magazines subsidize their work via two primary sources: (1) subscription sales, and (2) advertising sales. (In recent months, both of these subsidy sources have been drying up, which is why most major newspapers are in serious trouble.)

Every activity that is not income-producing is subsidized by one that is. It’s very hard to focus on non-income-producing activity when physical or operational needs aren’t being met in some other way. Putting in the time and effort to create free stuff to give away isn’t that important if you’re already working 80-hours a week just to pay the bills.

Anderson and Gladwell’s freely-available work is subsidized by the magazines they work for and the speeches they give. Godin’s 10+ years of free blogging have been subsidized by book sales, speaking engagements, and the sucessful sale of a company he founded. Fields’ blogging is subsidized by his successful fitness business. My writing on this website was first subsidized by my day job, and is now subsidized by the consulting I do. No subsidy, no freely-available content.

“There’s No Such Thing as a Free Lunch"

It’s easy to understand the appeal of getting things free, but the cliche is true - “free" lunches are always paid for by someone or something else. If the piper is not paid, the source of the “free" value disappears.

It’s important to support the work you enjoy if you want it to continue to exist. If you like a particular band and want them to keep making music, it’s important to vote with your dollars - buy their CDs, go to their concerts, etc. Making products and events available doesn’t mean they’ve “sold out." The same goes for your favorite bloggers when they recommend an affiliate product or create one of their own - it’s the subsidy that keeps the server running and allows them to spend time creating new things instead of doing something else.

What do you enjoy on a regular basis for free? How is it subsidized? What can you do to ensure it continues to exist?

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