Malcolm Gladwell takes apart Chris Anderson's "Free"

Pondering the narrow topics John McPhee has explored in his career, a critic once wrote, “One day John McPhee is going to bite of less than he can chew.” I’ve had the same thought about the subjects of Malcolm Gladwell books, to tell the truth; like Thomas Friedman and others, he seems to specialize in taking a really good, interesting idea and expanding it far beyond anything I wanted to know.

I say this to introduce what I found a compelling Gladwell piece in which he takes apart another author – Chris Anderson, author and editor of Wired – for a much greater sin: failing to report (or perhaps even understand) several essential points that turn his thesis on its head.

The thesis in question is Anderson’s much-cited theory that “Free” is the news business model – certainly in the digital world and, increasingly, in meatspace as well. (As widely noted, neither Anderson's book nor magazine is free.) For both a citation of the Anderson ideal and Gladwell’s brutally effective rebuttal, this:

"Information wants to be free,” Anderson tells us, “in the same way that life wants to spread and water wants to run downhill.” But information can’t actually want anything, can it? Amazon wants the information [from publishers] to be free, because that way Amazon makes more money. Why are the self-interested motives of powerful companies being elevated to a philosophical principle?

Having effectively dismissed the central idea in “Free,” Gladwell then happily proceeds to demolish a lot of the pseudo-factual evidence Anderson uses to support it.

For one, Anderson uses YouTube as a poster child for his point. ““Nobody is deciding whether a video is good enough to justify the scarce channel space it takes, because there is no scarce channel space,” he writes, and goes on:

Nobody is deciding whether a video is good enough to justify the scarce channel space it takes, because there is no scarce channel space. Distribution is now close enough to free to round down... which is why YouTube’s founders decided to give it away. . . . The result is both messy and runs counter to every instinct of a television professional, but this is what abundance both requires and demands.

Ooo. Bad choice, Anderson. As Gladwell telling points out, YouTube is a spectacular money loser. It costs its owners (Google) something like $360 million just for the bandwidth to serve up all those billions of videos. Even worse (for YouTube) was the discovery that advertisers don’t want their ads placed alongside most of the crap (skateboarding cats and bad dancers). In order to sell ads, YouTube pays roughly another $200 million to license quality commercial entertainment.

Gladwell:

To recap: YouTube is a great example of Free, except that Free technology ends up not being Free because of the way consumers respond to Free, fatally compromising YouTube’s ability to make money around Free, and forcing it to retreat from the “abundance thinking” that lies at the heart of Free. Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds.

Finally, Gladwell demonstrates what shallow reasoning Anderson and so many techno-utopian evangelists employ. Take a famous example from the 1950s, when Lewis Strauss, chair of the Atomic Energy Commission, predicted “our children will enjoy in their homes electrical energy that is too cheap to meter.”

Well, we all know that didn’t happen; Gladwell shows why it couldn’t happen: Strauss made his prediction based on the assumption that nuclear energy, compared to coal or fossil fuel, would generate electricity so cheaply it could be given away. In the words of another AEC commissioner: “Even if coal were mined and distributed free to electric generating plants today, the reduction in your monthly electricity bill would amount to but twenty per cent, so great is the cost of the plant itself and the distribution system.”

Obviously I am quite taken with Gladwell’s analysis, and urge you to click through to the New Yorker and read the whole thing. Because thinking and writing like Gladwell’s, I can assure you, does not come free – or even cheaply.

U{DATE: Josh Young points me to an analysis that says Google's loss is much less than the Credit Suisse number Gladwell cites. In truth, nobody knows, but I am sure Google doesn't want it to be free.

More mush, fewer facts

Jeff Jarvis reminds us today that UK Prime Minister Gordon Brown recently described the internet era as “more tumultuous than any previous economic or social revolution.”

Perhaps that isn't even worth correcting, but I believe it's dangerously ignorant. Too much of the debate about trends in media and communication nowadays is animated by similarly myopic and ignorant arguments. (I'd include Clay Shirky's claims about coverage of the 1968 Chicago riots, discussed here yesterday, in that group).

I mentioned this in a comment on Jeff's blog earlier today.

In just 35 years between 1844 and 1879, the world first experienced dependable electric lights, the telegraph, the telephone, a transatlantic telegraph cable, publication of the Communist manifesto, motion pictures, locomotives, the discovery of penicillin …and dozens more. Add a couple more years and we can throw in the Model T, locomotives, and AM radio.

I’m sure he’s right that better communication will [bring] changes in foreign policy. Good thing, too.

But the most tumultuous period ever? Such ignorance undermines the credibility of everybody who makes claims like that, certainly including the hugely unpopular PM Brown.

Come on, professor

In a valentine to Twitter on the TED blog, NYU Prof. Clay Shirky declares that social media (especially Twitter) have exposed developments following the Iranian elections as never before.

[T]his is it. The big one. This is the first revolution that has been catapulted onto a global stage and transformed by social media. I've been thinking a lot about the Chicago demonstrations of 1968 where they chanted "the whole world is watching." Really, that wasn't true then. But this time it's true ...

I think it's fantastic that we have TWitter and outher sources, and like cellphones (and faxes before them) social media surely are wonderful tools for self-organizing response.

It takes nothing away from those facts to call "bullshit" on his contention, however.

The 1968 Chicago riots were carried live on all three American television networks for an audience of at least 50 million people in this country alone.

There are about a million Twitter users.

Come on, professor.

Not with a blog but a twitter

I'm posting much less often here than I did while working fulltime in journalism.

For starters, I know less about what's going on. I'm less engaged in the cut-and-thrust and don't feel entitled to comment on everything that floats by. I reject the Olympian, detached pronouncements of many critics and don't want to fall prey to that myself. I've always disdained those who "wait up in the hills until the battle is over and then come down to shoot the wounded."

I've also concluded that much of what passes for debate in the field nowadays is tired, threadbare and unproductive. There's little to be gained from pointing out the factual errors underlying some doomsayers' predictions, for example; it doesn't change their behavior. There's no point encouraging publishers worried about paying the rent to spend more time pondering the relative value of a newsriver versus a topics page.

I remain optimistic about the future of a professional journalism that follows standards and applies expertise to help people verify and filter their information overload. While tomorrow's journalism won't be a mirror of today's, neither is it likely to involve rejection of all today's institutions and standards.

And, in any case, the 140-character frame of Twitter seems to fit both my mood and my schedule better than longer blog posts most days. I am more active there, as @howardweaver, commenting on a range of topics, certainly including news and journalism. You might enjoy the occasional tweets of "AP Moron Watch" examples, or episodic terse exchanges with the gravedancers.

I'll continue to use this space for subjects where I think I have something valuable to add. And I remain eager to hear from you, here or at howard (dot) weaver (at) gmail dot com.

What if readers decide what to pay for news?

Want to turn the pay-for-content debate on its head?

Fine then; take a look at Doc Searls’ plan that envisions a world where creators do charge for content, but consumers determine what price to pay.

It’s easy to dismiss the notion as naive or inadequate, but consider please his observation that “Whatever readers decide to pay, the sum of it won’t be $0, which is what readers are paying [online] now.”

More importantly, this approach recognizes that we have no idea what a news story is worth, and never have. In the days of scarcity and monopoly, price was a function of how badly readers wanted any part of the package we sold. It came only in a one-size-fits-all unit with the cost of delivery built in. If they wanted sports, 50¢. If they wanted world news, 50¢. How about classified listings for a used car? 50¢.

In that world, we never had any idea what unbundled news content was worth; there was no way for readers to show us. It was a binary vote from them: I'll take it all at your price, or I won't take it at all.

In a today’s media economy of abundance and zero cost of copying, we need to find out what news is worth. Unlike many, I don’t believe the old revenue model – chiefly ad sales – is going away entirely, but it certainly will never be the same. Tomorrow’s business model will involve (among other things) less revenue from advertising but vastly lower cost of distribution. What would we charge for a news story if we didn’t have to print and deliver a paper?

What would we need to charge? In the days when I looked at McClatchy's numbers, newsrooms cost about $300 million a year and internet revenues were approaching $200 million. The newsrooms are obviously smaller now, and internet sales at McClatchy continue to climb.

Discussion about paying for professional newsgathering these days includes ideas about philanthropy, non-profit status, even financing like NPR. EmanciPay deserves to be part of the discussion.

Rather than describe what Searls has in mind, I'd ask you to read it, ponder it, and let me hear what you think.

Think of EmanciPay as a way to unburden sellers of the need to keep trying to control markets that are beyond their control anyway. Think of it as a way that “free market” can mean more than “your choice of captor.” Think of it as a way that “customer relationships” can be worthy of the label because both sides are carrying their ends of the relationship burden — rather than the sellers’ side carrying the whole thing (as CRM systems do today).

Becoming a news consumer, and a curmudgeon

Forgive me for a few minutes while I work on my curmudgeon merit badge today.

In my new life as a consumer rather than producer of news, I’ve been surprised to learn just how often the conventions of standard practice seem to run contrary to common sense.

EXHIBIT A: If you follow me on Twitter (@howardweaver) you’ll have seen my frequent laments about the AP’s moronic practice of attaching impressive-sounding labels to stories that that tend to be, at best, slightly better than average. These can be AP IMPACT or AP EXCLUSIVE or the like.

Here’s a recent example: “AP IMPACT: Grads face worries about money, future.”

Oh, please. Labeling your stories like that is just like using exclamation points everywhere. Like laughing at your own jokes, it’s not done in polite society.

EXHIBIT B: I also found myself chafing Sunday over an NYT story suggesting that the president's nuanced positions and willingness to re-calibrate earlier decisions might be viewed as “flip flopping.”

Here was the first sentence that struck me as both banal and self-referential: “In a sound bite culture, there are limits to how much nuance the public can absorb.”

Think about that. By definition, a “sound bite culture” is the product of people being fed sound bites. And who does the feeding? The press, mainly. And on what authority does this reporter get to say there are limits to how much nuance we can absorb? You really think anybody’s tested those limits lately? The only person who’s tried nuance in the last 10 years just got elected president, so maybe her pat little assertion isn’t true.

Later in the piece, the reporter resorts to a classic “no shit” observation to reinforce a questionable premise: “Americans’ patience may not last, and there may come a time when the public does not listen as closely or carefully to Mr. Obama as it does today.”

Oh yeah? It would be equally true (and equally unhelpful) to say, “Americans’ patience may well last, and there may never come a time when the public does not listen as closely or carefully to Mr. Obama as it does today.”

That kind of weaseling “no shit” generalization reminds me of the classic gag headline about a Carter speech that actually saw print: More Mush From the Wimp.

EXHIBIT C: Reading public editor Clark Hoyt in the same paper reminded me what a bad job the New York Times and the rest of the press did handling Maureen Dowd’s apparent plagiarism. Hoyt wrote “Dowd told me the passage in question was part of an e-mail conversation with her friend.”

Okay, then: she admits copying her friend but denies plagiarizing Josh Marshall. In either case, she passed somebody else’s words off as her own. That’s a sin in the newsrooms where I worked.

Perhaps the question of whether she should be fired remains open. The question of whether she should be trusted does not.

( The typically level-headed Hoyt also added, “I do not think Dowd plagiarized, but I also do not think what she did was right.”)

Exhibit D: One final peeve to end my apparently grumpy afternoon.

Most of the news reports I’ve seen and California's governor himself referred to recent election results on budget issues as an emphatic rejection by Californians. An article in the Sunday opinion section went so far as to call it a “resounding message” from voters.

That strikes me as an absurd characterization considering that it a verdict rendered by about eight percent of the state’s eligible voters. (The percentage of population is even smaller if you consider than less than three-fourths of those eligible to register bothered to do so).

What's more, here’s that troublesome word from Exhibit A, above: nuance.

Very few news stories or even commentaries on the election noted the 800-pounds of gorilla truth in the room: much of California’s budget crisis results from the profoundly anti-democratic fact that legislators here can’t enact a budget by majority vote.

Honestly, they can’t. The votes of those elected by the most people isn’t enough to govern in this instance. Owing to restrictions on majority rule adopted years ago, it takes a 67% yes vote to pass the budget. That’s right: 34% of the legislators can trump the other 56%.

Whether you think that’s a good idea or not, you have to admit it’s relevant information.

Good news on McClatchy debt

Today's news about McClatchy's deeply discounted debt swap is a big deal, for the company and the industry.

The story may seem a bit opaque to us non-financial types, but I read it as a move that significantly strengthens the company's ability to weather the recession and positions it well to continue transformation as economic activity resumes. Early returns from the market agreed; the stock's up nearly 20% as I write this early Thursday.

More as I learn more. Today I am celebrating a smart, innovative move by McClatchy management.

END OF THE DAY UPDATE: The market, at least, has made its opinion known. McClatchy stock (nyse:mni) was up 30% on 6.3 million shares, about eight times the average volume.