The value of love and information

Ghosh, Anderson, and Gladwell open a great discussion about the value of information/content in a troublesome online economy where everything seems to be free. The main question without an answer here is what would be the economic model(s) that would support the production of professional content in online settings.

Ghosh attaches himself to basic economic principles: Prices rise with scarcity and fall with abundance. Because there is too much information available, the price of content would drop dramatically. Ghosh also argues that the economic model of the Web (if any) would reflect the real economic model of societies so it wouldn’t “contradict the economic principles that have generally worked.”

The most controversial idea of Ghosh is when he compares love and information in order to explain the new economic reality of the Web. He says love and information are extremely valuable even if they don’t have price tags on them. Of course love doesn’t have a cost that necessarily involves a transaction or hard cash (let’s not talk about prostitution or arranged marriage), but people never want to get a cheap love. Love is so important that they don’t want to get whatever is available.

Anderson, for his part, finds value in externalities such as attention and reputation, while Gladwell considers the quality of the content itself carries some value, and remembers the cost of maintenance and distribution.

Anderson centers his discussion around the idea of cross-subsidy: Costumers could get one product free (a dinner) if they buy another one (wine and beer) or acquire a different service.

His understanding of news as a subsidize product that lacks an economic model in the online environment is outstanding. Sharing the cost or finding an external value beyond the product (content) itself is an open challenge for online media.

However, Anderson falls short when he explains that cost of maintaining the network  (storage, processing, and bandwidth) is close to zero. That is not the case for many organizations that expend millions of dollars just to keep their users connected.

Gladwell wrote a harsh article in reaction to Anderson’s free content theory. His strongest points were around the quality of the content and the invisible expenses of maintaining the network. He does not believe in iron laws toward intellectual production. He considers a common error of “technological utopians” to assume that a particular scientific revolution would erase any traces of its predecessors.

He also talks about the invisible costs behind any product: “The expensive part of making drugs has never been what happens in the laboratory. It’s what happens after the laboratory, like the clinical testing, which can take years and cost hundreds of millions of dollars.”