Additionally, offering insights into recent tech industry developments is TechCrunch’s Michael Arrington (this part is less important).

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Found via Gerd Leonhard’s site MediaFuturist

I told him that one or perhaps all of the audio (radio) programs we create today — and for which we charge hefty fees to “member” stations — be simply given away to any station that wanted it.

Immediately he shot back: “But someone has to pay for that content!”

I love these situations. I get to try out newfangled business or economics insights to suggest something that’s anathema to the old guard (people and/or ideas). Plus, it’s a little logical fallacy that’s fun to pick apart:

• Me: Give it away for free.
• Him: We can’t — someone has to pay for it.
• Me: Who said no one would pay for it?

Indeed, someone must pay for the people and equipment (mostly people) required to produce award-winning content, regardless of medium or delivery system. The future isn’t all user-generated content (UGC).

The notion of free has come up a lot for me in the last year, as I’ve ruminated on the idea that PBS and NPR should give away all their content to incumbent pubcasting stations for free. (But someone has to pay for that content!) I’ll explore more of that idea in postings to come.

For now, I’d like to share some FREE readings that have been published within the last week concerning this notion of giving it away, seemingly willy-nilly. The notion of “free” has actually been a viable business option for decades, but in the digital media space the idea is gaining widespread traction very quickly.

Why free?

Because in the digital media world, where every user is one link away from any other user and everything can be digitally copied to perfection with little or no impediments, maintaining control is becoming impossible. Plus, as media content volume rises toward infinity (or certainly more than any one person can possibly consume), the value of content (in broad terms) falls toward zero.

So, here are my picks for the late February 2008 “free reader” if you want to get schooled in how and why giving it away makes sense in lots of situations:

Free! Why $0.00 Is the Future of Business
Chris Anderson / Wired / 25 Feb 2008

Anderson was the author of the article and follow-on book called The Long Tail that’s been cited as much as any Web 2.0 meme can possibly be cited. It’s accepted as a given truth (a little too easily, I might add) at this point. Now he’s been exploring the notion of free as a part of viable business models and this is the opening article in what’s sure to be both a series of thought pieces and, eventually a book. This is basically the seminal article of “free” at this point. There’s even a little intro video included with the article, featuring Anderson himself.

Chris Anderson Takes Up The Free Banner
Mike Masnick / Techdirt / 25 Feb 2008

That ‘Free’ Stuff Is Catching On…
Mike Masnick / Techdirt /26 Feb 2008

Masnick is a wizard at both succintcly explaining tech-focused business developments and eviscerating ideas that make no sense. In these two cases, he points out the Anderson article, adds some other links, and in the first article points out the mistake in Anderson’s logic — the notion that the “free” model turns economic principles on their heads. He rightly points out that, no, in fact no laws of economics are broken. Well worth your two clicks so you don’t get sucked into believing FREE is bigger than it is.

Free is the Future
Lee LeFever / Common Craft / 26 Feb 2008

Step aside from the free hyperbole for a moment and read this piece. In this case, the guy that owns and operates the Common Craft custom video development service explains all the ways in which his business — a money-making venture, to be sure — has benefited by using free technologies and services from other businesses. Indeed, his two-person shop is wildly successful today precisely due to the impacts those free services had on their ability to get the word out and share their work. It’s a great piece because Lefever takes you step by step through the ways in which “free” made their profitable business possible.

Free Is A Great Way To Make Money
Fred Wilson / A VC / 25 Feb 2008

This post is mostly a link over to the Anderson article — with one exception. Wilson points to one of his own posts from July 2005 (!) that discusses the notion of free in business models.

Better Than Free
Kevin Kelly / The Technium / 31 Jan 2008

• Immediacy
• Personalization
• Interpretation
• Authenticity
• Accessibility
• Embodiment
• Patronage
• Findability

Sick of discovering how you have to give it all away? Wondering how you’ll actually make money? Well here’s the antidote to the free movement — here’s what can’t be given away, what really carries lasting value. This article probably had more buzz at the IMA conference than perhaps any other because it lays down a conceptual map for the services that public media can provide that are fundamentally undisruptable (yes, I just made that word up).

My shocking and insane recommendation:

• PBS should “implode” and reorganize itself on a variation of the C-SPAN model — not the programming, but the distribution system. (C-SPAN sells its service directly to distribution providers like cable and satellite companies. Why can’t PBS do this? Answer: They could.)
• This new approach would create between 3-10 “channels” of content that are sold directly to cable, satellite and IPTV providers nationwide; each channel would be themed around a coherent content set (a la Discovery’s various channels).
• PBS then additionally monetizes all those channels (on top of the distribution revenue) with a more organized “advertising lite” model that they’re already pursuing, but pursuing in a badly-organized way. New approach:
  • put the ads into multiple breaks during the hour, not in huge viewer-irritating blocks at the top of the hour
  • but… run ads less than any commercial station
  • and stick to the standards already in place for allowed/disallowed message types
  • sell the ads nationally; ad runs are guaranteed because there are no local stations to mess with the carriage levels or patterns
  • whether or not you let producers sell embedded ads could be figured out
• PBS should then “explode” itself by turning over all its content to the existing local public TV stations — for free (or for a nominal administrative fee); the shows would carry the aforementioned embedded ads, even when played out on localized schedules.
• PBS should further explode itself (after an adjustment period) by providing the content to other nonprofits under the same fee structure as the legacy member stations; schools, new public media players, and so on could get access to the content and use it for public good in their areas.

Why?

• Local stations in small- to mid-size markets today are unable to effectively produce community-engaging relevant content because so much of their budgets go to buy programming from PBS and others (who in turn buy programming from producers); by releasing these smaller stations from the financial burden, they can then spend that money to engage with their public online, in person and over the air in ways that are economically unfeasible today — but are critical to any media company’s survival going forward.
• The big producing stations will be either largely unaffected or helped — they can still sell programming to PBS for distribution, and with the increased distribution capacity (more channels), and more stable income stream, they just might be able to sell more.
• PBS could finally break up its programming into channels; the programming model today (“everybody into the pool!” ) doesn’t work for cable users trained to expect thematic channels; we would move further into the PBS Kids and Sprout models and compete with the Discoveries of the world on their own turf.
• The PBS member station model is wildly overbuilt — we do the same things all over the country again and again and again, each in our own town. It’s a waste of taxpayer and donor dollars. This gives the public a unified service that’s more efficient and will be capable of producing more content, both locally and nationally.
• If local stations really do provide a value-add service that’s unique to their community, they can still do so under this model. Indeed, once freed from the heavy PBS licensing fees, they’ll be in the best position in 10 years or more to uniquely serve their local communities.
• The only local stations left after all this would be those that are truly engaged in their communities and produce products/services that meet real needs. And that’s the way it should be.

Scary stuff, no? But some variation of this plan may be the only solution for the future. One participant at dinner suggested PBS would never do anything to disintermediate member stations. That’s sweet, but it may not be PBS’s choice in the end. Economics may force a decision something like the above. Indeed, it might even be the best solution ahead of a crisis (but please, share your thoughts below!).

Why might PBS be forced into this model anyway? Keep in mind the PBS universe is held together by several thin threads. Tugging at any one of them could lead to a system-wide financial implosion. For example…

Consider the DTV transition next year and the weakening economy right now. Combine those factors with stations that are already weak (Peoria, anyone?) and you could see a die-off of perhaps 10% or 20% of the stations by 2011 (2 years after the DTV changeover). If that happens, then either there’s a PBS pull-back in content that further erodes the service profile (leading to an erosion of financial support), or rates go up substantially for the remaining station cohort, thus continuing the carnage for those that survived the first culling.

But never mind the disaster scenario — think of the possibilities and opportunities! If we could model and implement this correctly…

• local stations see fees drop to zero or near zero
• local stations go back to doing local production and engagement
• local stations can now focus on producing a service that’s unique to their geography — something that PBS cannot do as a national entity
• PBS gets control of its service at the national level for the first time
• PBS gets financial stability because it controls its own income and expense streams directly
• cable/satellite providers get a unified service that’s easier to manage (from a single source) and makes more sense for their customers (due to the channelization)
• kids get great PBS programming for them in solid 24×7 services
• adults get great PBS programming 24×7, too — no more waiting for the kids shows to go off-air
• more programming enters the network from new local production (with national appeal), community-generated and user-generated content and so on
• the station vs. network fights and suspicions end (!) — each player now has a clear mandate and responsibility in the public media universe
• local distribution channels expand to new players — even those without FCC licenses
• CPB money, when provided, truly goes to provide local service — something every Congressman can get behind because their constituents are now better served

Okay, that’s the idea. You can see why it gets people’s ire up. Comments are open!

By the way, I realize if PBS sells direct to cable/satellite services that breaks the free over-the-air broadcast model to some degree. But… 1) I don’t think Congress is going to care that much — most of their (voting and rich) constituents will not fight the change, especially since the 2009 DTV transition will move more people to cable than ever before, and 2) if the PBS cost to local stations drops to zero, those stations are less likely to go out of business anyway.