Why should we have to pay for an iPhone?
Shouldn't those be free, too?

I'm personally outraged that I don't get Time Magazine for free. I mean, I buy a subscription, and it's still so littered with ads I can never find the articles I'm looking for, and then when I do find the article, it turns out to be some schlocky rant about how all software should be free. I mean, I just paid for this magazine and I'm only going to read it once. And then cry.

Oh, excellent point, Nathan! Just brilliant. :)

Perhaps Time Magazine could offer Anita Hamilton's writing skills for free.

Well, at least you are 'only' paying around $4 per gallon. Here in the Netherlands we pay €1.68 per liter. (which is roughly equivalent to US$ 10 per gallon). As with gas the best way is to choose carefully what you need to have. With the many applications announced there will be different applications that do mostly the same thing but have a different price point. Pick the one that fits you best. (And re. gas, pick the car with the best milage or try to combine trips or choose different methods of transport where possible)

At least she knows how to place her modifiers. I can't fathom why you'd riff on a quote only to misplace the modifiers she didn't.

The really insidious part of stories like this (and people who talk about Hulu) is that ad-supported isn't free. Ads demand your time/attention. Why should I have to pay that fee every time I use an application? Why is she optimizing for applications you use only once? That's called a trial. Any software I buy, I use more than once.

um if everything was free then there would be no point in advertising would there? The whole point of advertising is to make people buy stuff. That's why you can't support everything wth ads!

And if all software was free then there would be no software ads! What!?

"At least she knows how to place her modifiers. I can't fathom why you'd riff on a quote only to misplace the modifiers she didn't."

I had to have something to annoy you with. Sorry. I had to have something with which to annoy you. Better?

Great post! You've nailed the right spot!

"Come to think of it, what about all those times that I’m forced to watch ads and pay for things?"

Like a subscription to Time, perhaps?

I couldn't have said it better myself! Great work!!

"When it comes right down to it, what’s wrong with exchanging money for a product? It’s a system that’s worked pretty well for, oh, a few thousand years."

There is something very wrong with it indeed and it is called poverty. It does not really seem to work that well for the very poor does it and in the world most people seem to be very poor.
20% of the population in the developed nations, consume 86% of the world’s goods

And then you begin to wonder, why DID God make us?…

As Khurt Williams said, I hope Time got Anita's writing services for free. After all, I'm only going to read her article once, and make sure I never read anything with her byline ever again...! What a waste of bandwidth. At least she earned a few thousand dollars for Time with all the Mac faithful clicking through and loggin page hits for their myriad ads. Mission accomplished I suppose...

Excellent post. Seldom has the developer's side of things been put so simply. For that I thank you.

The thing that annoys me most in this whole discussion is the idea that ad based services are "free". People pay good money to avoid ads. Because ads cost you in time and annoyance. Let's stop using the word "free" in the same context as "advertisement".

I love it how people in non-us countries, specifically european countries, say how much more expensive their gas is. The problem is not the cost of gas, but the taxes your government has imposed on the gas. Here in the US, it averages between 5%-10% per gallon. In most other countries, like say the netherlands, its 120% or so. Other european countries anywhere between 40%-140%. So after you remove the taxes form the gas, we are paying close to the same price. Maybe you should be talking to your government about your high gas prices.

Thank you, brother! That'll show Anita.

I don't understand it either, why people sometimes feel like they're entitled to something, acting like spoiled brats when they should know better and grow up.

Uh this Time article is just dumb. If *everything* were free, then there wouldn't even be an advertising industry. The free-via-ads business model is directly supported by the traditional business model of exchanging money for goods or services.

The whole point of payment is that you give someone money to take care of a problem that you don’t want to do yourself...This is economics at its most basic. Seriously. It doesn’t get any more basic than this.

Not so, sir. Economics at its most basic is the exchange of goods or services for other goods or services...which is to say "barter." Money -- more particularly fiat money as used in the US -- is actually a reasonably complicated idea. (I'll ignore the inevitable "humorous" suggestion that economics at its most basic would be bashing the other guy over the head with a rock and taking his stuff.)

Otherwise, a fine piece, and well said!

Ms. Hamilton is wrong in believing that Google is in the software business. Google uses the "free" software and services to manufacture something it can sell for a great deal of money - a ratable audience. Just as television and radio use sitcoms, news, and music to attract an audience for its customers' ads, Google uses search, email, and mapping. Many (most?) people miss the point the when you use Google search (or watch America's Idol), you become the product for sale. With Apple (and others), you are the customer.

95% of the time I'd rather pay for something than use the advertisement-based alternative. There isn't enough of a glut of ads being stuffed down our throats? Sort of gives me the creeps when my g-mail message is accompanied by a bunch of ads "related" to what I just wrote. Anita's riff sounds like the screed of someone working for a huge corporate media entity. I'm sure AOL/Time-Warner love her idea (coincidence?).

As for Hulu. Hulu can kiss my a**, whereas I could access iTunes in China and would gladly pay for the privilege to buy Battlestar Galactica. Hulu is not available here and is only a stupid proprietary streaming, ad supported service anyway. Sucks!

Very well put indeed...

Just to chime in... calling ad supported "free" is spin that it is time to question. The most valuable and truly irreplaceable resource I have is my time. Ad-supported, if I am forced to pay attention to the ad, is generally the most expensive. I'll buy the season DVD, thank you.

And to the extent that we consume the content without looking at the ad (whether on the web, using tivo, etc.) the ad-support isn't going to pay for the service over time, is it?

I can go into a random town as a total stranger and find people who smile at me as they provide me a fresh, highly caffeinated beverage. They system of paying for things is actually pretty freaking awesome.

The best article you can read on the subject is Better Than Free by Kevin Kelly.

Excerpt: "When copies are free, you need to sell things which can not be copied."

I'm sure Anita will be returning the fee she was paid for writing the original article. Right ?

I love it how people in non-us countries, specifically european countries, say how much more expensive their gas is. The problem is not the cost of gas, but the taxes your government has imposed on the gas.

The difference is that they usually aren't complaining, unlike Americans, who constantly whine about the "high cost" of their relatively cheap gas.

High taxes on gas is not a problem. The problem is that gas taxes in the US are too low, and encourage people waste fuel and drive ridiculous gas guzzlers. Americans should be complaining to the government that gas taxes are too low, and are threatening future survival.

Two words: marginal cost.

I'm a software developer, working on a productivity application for iPhone. We are a three person family company.

I point to Richard Stallman for not being clear enough about what free software is about. He tried to clarify that he was not talking about "free beer." Of course people LIKE the idea of free beer, so that is what stuck in the public consciousness.

The idea of free software was to have people agree to pay for software before it was written, and then for the code to be available. Basically a business model where developers don't take any risk. Cool idea, but in practice, it really only works for Richard Stallman, who got a grant, big companies like Google who pay their employees to create software, or through venture capital backed companies. Instead, many small independent developers like us make a scary investment of money and unbelievable commitment of time to make a business from an idea that won't let us go. That is what makes us ARTISTS. Developers like us, who depend on software sales for our livelihood, only have the option to be paid after the work, once the product is completed.

And, yes, we will be charging for our iPhone application.... because we have to pay for stuff too. :-)

Catherine E. White
President
www.llamagraphics.com
Creators of Life Balance software
for Palm OS, Macintosh and Windows. iPhone soon too!

How about this for basic economics. The value of something is based on supply and demand.

With the digital revoluiton there is no cap on the supply. It is like owning an apple orchard with infinite apples. What would be the price on apples then? Given that the supply is limitless, souldn't it even be immoral to prevent someone from getting a free apple from the orchard of limitless apples?

It's called the digital revoluiton.

Old fashioned ways of looking at products don't count any longer. In fact the idea was becoming stale with the advent of mass-production.

How much do you think the Mona Lisa will be worth if some sort of star trek device was made that allowed for every home to have an atom for atom facsimile?

Well its not star trek technology we have it RIGHT NOW in every home that has a computer and an internet connection. Any thing that can be digitized can have a perfect byte for byte copy.

Digital goods should be free or next to free.

I know this won't go down well in our society that has shifted more into a service society. Where many jobs are many degrees removed from providing the basic essentials of life, the things that have real value.

Seriously, there need to be alternative methods of compensation for digital goods. It's stupid.

Or maybe you like DRM and attempts to impose an artificial scarcity on digital goods to give them the illusion of having the same value of a genuinely scarce physical product?

The whole ad supported deal is a major pain at times, such as an ad supported game one of my younger brothers got. It's one of those simple flash games that sells for less than $10 but is very addicting and a great way to spend 5-10 minutes where there's nothing else to do. It shows a small ad at the beginning of play every time, and even at $0.03 per ad view, the game has likely been paid off over a dozen times already. It's a minor annoyance, but after using it so many times a version without ads that's simply bought in the normal way would've been nice to get instead of the ad supported version.

Amusingly enough the fact that he couldn't buy the game and had to watch the ad every time led him to delete the game, because watching the ad every time was getting too annoying and reduced the value of the game to the point where it was no longer worth the disk space to him.

its economics. most of those things don't have a zero marginal cost. software does. which drives the price to zero.

Rogue Tomato said: "Seriously, there need to be alternative methods of compensation for digital goods. It's stupid."

What is stupid is people demanding things for nothing, and giving a partially-defensible statement like the above, which fails in a colossal fashion to provide a reasonable and logical solution.

Music, video, software - yes, we can copy it for free. Then all people that produce such things can live for free, since you're too freaking cheap to pay them?

I can't tolerate such ignorance and self-righteousness anymore. Please think things through this time - ALL the way through!

@Rogue Tomato

I'll gladly give you all the rotten, moldy apples from my orchard of infinity. But if you want a good apple, you're going to have to pay for it. The "digital revoluiton [sic]" is certainly producing its share of valueless items, but that doesn't mean that it should all be free.

Or you might be making the same point about marginal cost as Anonymous. I admit I haven't had economics course in five years, but I don't understand at all why "zero marginal cost" equates to "zero cost." There are still costs associated with developing the software, both before it's released and during the ongoing release cycle (presumably). How should developers be compensated for those costs?

theres something this discussion is lacking... like music, software can be downloaded with file sharing programs for "free". so the question becomes one of ethics.

Where does one draw the line? is it okay to steal from big corporations like microsoft and apple? can one justify stealing from the rich and paying for small business enterprises?

Also is it not stealing when you watch an episode of your favorite show online without its intended commercials. are you not stealing from the networks and companies who paid a premium for that airtime.

@Armando:
Yes, I know that we are taxed a lot more on gas than in the US. The main point I wanted to make (but which maybe got a bit lost in the gas issue) is that price is an instrument that drives decission.
I'm not really bothered by the gas prices. I drive maybe 100 km per week, most of the time I ride my bike. (and traffic jams, not gas prices made me move close to work).

@ Brandon Lennox

In my fictional orchard all the apples would be perfect. The best apples of all varieties. That's what nice about digitisation. "Bite" for "bite" perfect copies.

Anyway, back to my point.

There is nothing apart from DRM that is preventing people from having a copy of something digital. It is quite different to physical produce. If I have a diamond in the real world, something rare and considered precious it is worth a lot of money. If I could dig them up by the bucketful from my back garden. The market would dry up. They would be more or less worthless.

Now let's shift to something of human creation. A beautiful ornate vase. I spent months laboriously crafting this thing. It is so valuable that the emperor has it in his collection - It is expensive! Cut to hundred years later. Technology has moved on. I own a factory that can pump these things out. Now, you notice that the price is CONSIDERABLY less. Now imagine that people can produce this thing on their own with merely the blueprint, at no cost to me. You think people are going to buy vases?

You are right that some time has been spent creating the blueprint. But... what value is this and how should it be rewarded.

Is it fair that the creator gets rewarded based on the number of free copies that are made? Not really. Because the actual number of copies didn't cost him a thing. It has no bearing on the effort that went into creating the blueprint.

That is why alternative methods of compensation need to be implemented. The creator should get something. But nothing like the free money they are getting now. It should reflect similar pay levels of other work of the same skill level.

Because quite frankly this software developer who makes hundreds of thousands a year, could find his life in the hands of someone who is smarter, studied harder, puts more hours into his work, makes more effort, but WOE, only treats one person at a time because he is a doctor, and does not earn any where near as much. Is that a meritocracy? It's no where near.

It only gets by at the moment because people are still thinking of things in the pre-digital way of thinking. And business in general and the various methods of making money are total bullshit.

Nathan's comments on ads in Time are spot on. I learned years ago (from someone who'd been receiving a sports magazine free for years) that ALL of the subscription money the magazines get is free and clear profit. The ads MORE than pay for the magazines. Just think of all the stupid women's magazines, then home-based magazines - there are MORe ads about those topics than articles produced by the magazine. Time is no different.

@Luis Castellanos

Technically it is copyright infringement not stealing.

I know because I have had my bike [i]stolen[/i]. Had the villain assessed my bike and with his own tools and materials assembled his own copy of my bike and ridden off with it - I would not have had to walk home from the shop!!!

Copyright laws are generally there to protect the interest of all the people. So companies feel safe to produce new content.

Anyway back to alternative methods of compensation. Ok I'm off to fairy land a bit here. But if you are familiar with our BBC in the UK. It is funded by a licence fee, and they have an obligation a certain standard of content. So on BBC 1 we get intelligent documentaries and unbiased news and first class dramas with no ADVERTISEMENT BREAKS. Meanwhile on the profit driven stations. They realised the best way to make money was phone-in quiz game-shows. Normally commercial TV is blighted with adverts, but in this case the cheap to produce pile of steaming shit was making so much money that they actually cancelled the advertisement breaks. Do you notice any difference in quality here? Oh yes, the almost state funded endeavour is making high-brow content and the commercial stuff is godawful rubbish like Big Brother.

In the old days the BBC used to make computers too. So what I am suggesting are regulated bodies of entertainment and software, etc. That are not motivated by profit, but by public service. We will end up culturally richer!

[/end cloud cuckoo dream and return to flawed world]

I think everyone is ignoring a fact that Jobs mentioned in the keynote. "most of the apps will be free." Of course more intricate apps will have a price tag,(and deserve to) but as was stated quite well, I'd rather pay for an app than wait for ads to finish playing, or see target practice banners flashing all over the place. Ironically, free apps are one of the best advertisements you can make. Imagine a small software company developing a simple game app and giving it away for free. The store displays company info, such as their website. Bingo, instant advertising. A simple non-obtrusive ad which could generate moderate web traffic.

Many folks don't remember that the initial idea behind cable television was that, since they were asking people to pay for the service, there would be no commercials. Then someone came up with the brilliant idea - "Hey, we can charge for the service and still run commercials!"
People will always pay for what they want, and there's nothing wrong with that.

@ Rogue Tomato

I read your comments with interest, however...

Many software developers do NOT make a large amount of money each year. Many are small home based businesses just getting by.

In addition, if the product or service provided has no value in and of itself because it can be copied freely, then what of the time it takes to produce that product? I am a software QA analyst. I produce nothing tangible, yet without my time the software my employer produces would not work. Since I produce nothing tangible, should I have my employer watch advertisements instead of paying me? If I don't get paid, what else can I do in my (now very limited) time each week to generate the funds needed for my mortgage, my groceries, the education and clothing needed for my children? Maybe if I have clothing manufacturers plaster advertisements on my kids shirts I can get them for "free" and not need to earn a living of my own! Oh, wait, the most expensive clothing does advertise itself (Thanks Tommy Hilfiger)! Of course that is one reason why I don't buy it. I will buy products, I may advertise products, but I will not pay to advertise products!

If I could directly exchange my time spent creating quality products for the things I need to have in my life I would consider doing so. Of course, I don't strictly need a TV but without that how to I watch those fabulous BBC exports like Dr. Who?

The fact is we live in a Capitalistic, not Socialistic society. Every product or service that has value to an end consumer should have a reward for the time and energy put into it. time and energy that I would rather spend with my children raising them to be productive citizens of the world, but which I cannot spend with them while simultaneously clothing and feeding them.

Last question, if I were to develop an application that completely changed your life and allowed you to accomplish something you always wanted to do but never had the tools to accomplish (say software to produce better, more detailed, easier to read MRI images that could save lives) and then gave it away for free because it could be copied anyway–would you pay me for the thousands of dollars of tangible products I need to accomplish that task? Or is the fact that all of this is produced on computers that have costs to them irrelevant?

Love the article! I am sick of looking at ads everywhere I go anyway. That is why I stopped listening to music on FM radio.

BTW... If magazines were free, then too many people would want subscriptions, and the ads would no longer cover the cost of producing copies. God forbid anyone make a profit. That might be incentive to keep putting out great content.

Wow, exceptionally written Dan. Great points, succinct analogies. Perfect.