by: Scott Goodson

Paul Krugman's Op Ed in Friday's New York Times should be bone chilling for anyone working in the creative end of the business world. That is if you believe it.

He suggests that the digital world and the net is and will increasingly devalue creativity to the extent that businesses will need to give it away for free in order to maintain relationships with customers.

I was thunderstruck by the quote by Esther Dyson, a commentator on emerging digital technology, who Krugman quotes as making a striking prediction:

"that the ease with which digital content can be copied and disseminated would eventually force businesses to sell the results of creative activity cheaply, or even give it away. Whatever the product — software, books, music, movies — the cost of creation would have to be recouped indirectly: businesses would have to “distribute intellectual property free in order to sell services and relationships.”

For example, she described how some software companies gave their product away but earned fees for installation and servicing. But her most compelling illustration of how you can make money by giving stuff away was that of the Grateful Dead, who encouraged people to tape live performances because “enough of the people who copy and listen to Grateful Dead tapes end up paying for hats, T-shirts and performance tickets. In the new era, the ancillary market is the market.”

Here is Krugman's full piece. I'm going to post another story Esther wrote in the WSJ a couple months back.

The article was an afront to my personal experience that creativity is the currency of business and that creativity can add value and that its protection is one of the tenants of our modern society. It seems that is not what will happen in the future. What Krugman doesn’t talk much about in the piece is the trouble with a world where everyone gives it away.

From a quality point of view, giving out free stuff will create a market with the lowest common denominator of content. The best will still cost a fortune. What Krugman and Esther don't write about is that the trouble with free stuff is it's free. Scarcity is the new premium, the new luxury and this will continue in the digital landscape. Yes mass content is free and more of it is pouring into our lives through the WWW. But the quality of a Picasso or a Moore, the sound of brilliance, the writing of the very best will always be special. Even companies that utilize original and the very best creativity will thrive over companies who opt for volume.

It's no coeincidence that Esther has financial interests with WPP. A major corporate advertising company whose profits are made off the back of mountains of advertising volume.

Those of us who spend our lives innovating creative ideas for companies to differentiate themselves, and who stand for the power of the creative thought, we who tell stories in interesting and innovative new ways hold the thesis of this article to be false.

Throughout history, the original idea, has always carried a value even when market forces radically changed the world around us.

The trouble with free is what Joseph J. Esposito says: "That trouble is precisely what John Perry Barlow (who apparently gave the idea to Esther Dyson) saw from the other end of the telescope: that rather than selling copyrighted works, many authors and artists will use their work to promote other things. The classic example is tickets to Grateful Dead concerts. My concern is that not all content should be promotional. It will affect the nature, and the integrity, of the content."

Original Post:
http://scottgoodson.typepad.com/my_weblog/2008/06/a-striking-prediction-for-anyone-in-the-creative-business.html

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