Thursday, April 3. 2008
Freetards and the FreeTardis
There is a concept (a meme?) floating around the online community, that online products and services can be free, indefinitely.
So how has this arisen?
“Freetards” as proponents are known, believe that the restructuring of the online industry, open source working models etc etc, imply a world of free online content and services forever hereafter.
However, for some strange reason, some people seem to doubt this. One issue is that “Freetards” are not well known for their ability to lucidly explain their position, as The Register notes.
So, we have stepped forward to explain how FreeConomics works…..Figure 1 below shows the Old Economic Model, showing how costs are incurred in a supply chain.
From the diagram, it can be seen that across the supply chain the costs are being reduced, sometimes radically:
However, even falling by 90% does not mean free, at least not indefinitely. If you look along that supply chain, at each point there is still hardware to buy, software to write, wetware to feed etc. These are not zero cost games because outside of the Web 2.0 Bubble, the real economy wants real cash or they shut down the services.
However, Freetards believe that this can be overcome – various approaches are put forward – Unlimited Advertising, endless VC money and “gift economies” are among the most fanciful approaches used.
We have looked into this, however, and found that there is a more practical way – using technology well known to the Ancients (cf the Horn of Plenty, the Ever Full Bowl, The Continuously refilling Pitcher) we have realized that the Freetards have discovered a Deus ex Machina in the Supply Chain – the FreeTardis.
(For non Dr Who fans - the Tardis is a time travelling spaceship that looks like a police phone box, but is far, far larger inside than out)
The FreeTardis looks a bit like a piggy bank, but is a device with infinite ability to generate cash, and pay all those unreasonable people in the supply chain who want to feed meters, strange habits, their children etc. Onc connected to the system, the laws of FreeConomics can take effect.
This is shown in Fig 2.0
Yes – just plug a Freetardis into the supply chain, and it automatically pays all the players, leaving the end customer free to pay nothing.
How does it work? Well, by reading the literature, as best we can see it does so by obeying the Three Laws of FreeConomics:
Would you like a FreeTardis for your value chain?
We have a few left over – but they’re not free, of course……
So how has this arisen?
“Freetards” as proponents are known, believe that the restructuring of the online industry, open source working models etc etc, imply a world of free online content and services forever hereafter.
However, for some strange reason, some people seem to doubt this. One issue is that “Freetards” are not well known for their ability to lucidly explain their position, as The Register notes.
So, we have stepped forward to explain how FreeConomics works…..Figure 1 below shows the Old Economic Model, showing how costs are incurred in a supply chain.
Simplified Supply Chain with types of cost incurred
From the diagram, it can be seen that across the supply chain the costs are being reduced, sometimes radically:
Content Creation - lower costs of content producing equipment has reduced costs of capture and creation (as has the ability to copy and evade rights charges), and the emergence of User Generated (aka free) Content has reduced content costs for professionals where differentiation is low (Photography comes to mind). In addition, enthusiasts are often tempted to offset their costs in creation of content (See our earlier post on this here), which is the underlying economic driver of initial Open Source economics
Aggregation – Moving from Push to Pull via Search has reduced costs, as has the automation / socialization of editing functions. Marketing costs are also reduced in a networked world, to the extent where the transaction costs of some items makes it cheaper to give them away rather than charge for them
Distribution – Moore’s Law, working open standards and a glut of bandwidth and kit from the dotcom failures has meant the cost per megabyte, teraflop and kilobaud has plummeted.
Customer Environment – Moore’s Law, Metcalfe’s Law and increasing adherence to open architectures, plus device interchangeability and application flexibility, has led to the total cost of ownership falling.
However, even falling by 90% does not mean free, at least not indefinitely. If you look along that supply chain, at each point there is still hardware to buy, software to write, wetware to feed etc. These are not zero cost games because outside of the Web 2.0 Bubble, the real economy wants real cash or they shut down the services.
However, Freetards believe that this can be overcome – various approaches are put forward – Unlimited Advertising, endless VC money and “gift economies” are among the most fanciful approaches used.
We have looked into this, however, and found that there is a more practical way – using technology well known to the Ancients (cf the Horn of Plenty, the Ever Full Bowl, The Continuously refilling Pitcher) we have realized that the Freetards have discovered a Deus ex Machina in the Supply Chain – the FreeTardis.
(For non Dr Who fans - the Tardis is a time travelling spaceship that looks like a police phone box, but is far, far larger inside than out)
The FreeTardis looks a bit like a piggy bank, but is a device with infinite ability to generate cash, and pay all those unreasonable people in the supply chain who want to feed meters, strange habits, their children etc. Onc connected to the system, the laws of FreeConomics can take effect.
This is shown in Fig 2.0
Supply Chain showing impact of FreeTardis implementation
Yes – just plug a Freetardis into the supply chain, and it automatically pays all the players, leaving the end customer free to pay nothing.
How does it work? Well, by reading the literature, as best we can see it does so by obeying the Three Laws of FreeConomics:
(i) For every action, there is an equal and opposite payment (Bear's Stern law, or Northern Rocket Science)
(ii) Although all systems have a tendency to increase their entropy without effort, Schrodinger’s LolCat law says that “if u can’t see it, izn’t there”
(iii) Barnum's Law - There is always a bigger sucker
Would you like a FreeTardis for your value chain?
We have a few left over – but they’re not free, of course……
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Coming from a biochemistry background, the similarities between freetardism and a viral infection are striking.
The virus is called 'free' and the silly-VC-overfunded startup is the host that can provide, for a limited time only, all the resources needed to sustain the fundamentally unsustainable virion. The virus eventually kills the host, but usually it has been sustained for just long enough to spread to other hosts.
The spreading/infective process is analogous to a freetard startup forcing all other players in its chosen marketplace to also go free to compete.
If the host died off faster (less silly VC 'build it and monetize later' money) the market wouldn't have to respond.
With a bit more thought, similarities at the DNA level might also be apparent!
Hey, Broadsight: maybe next time a free-troubled client comes to your with their worries, you should prescribe an anti-Freevirus vaccination - a brief, but ultimately safe, walk on the 'free' side, just long enough to put them off for life; and if their marketplace is infected, tell them to wrap up warmly and bed down until it has passed, or move to non-infected areas!
The virus is called 'free' and the silly-VC-overfunded startup is the host that can provide, for a limited time only, all the resources needed to sustain the fundamentally unsustainable virion. The virus eventually kills the host, but usually it has been sustained for just long enough to spread to other hosts.
The spreading/infective process is analogous to a freetard startup forcing all other players in its chosen marketplace to also go free to compete.
If the host died off faster (less silly VC 'build it and monetize later' money) the market wouldn't have to respond.
With a bit more thought, similarities at the DNA level might also be apparent!
Hey, Broadsight: maybe next time a free-troubled client comes to your with their worries, you should prescribe an anti-Freevirus vaccination - a brief, but ultimately safe, walk on the 'free' side, just long enough to put them off for life; and if their marketplace is infected, tell them to wrap up warmly and bed down until it has passed, or move to non-infected areas!
Absolutely - are you familiar with memetic theory, which treats ideas as mental genes (Memes).
Part of the thinking is based on virality, but equating Freetardism to a parasite meme is inspired
However, if you are familiar with game theory, most simulations of these markets show that IF you can go free and thus rapidly create a market, and stay free longer than all the others (ie you are Last Man Standing in a sector) then you clean up.
Hence the continual "race for free" by VC backed companies
And hence the continual confuson of cause with effect by non-economists (and some snake oil peddlars) in the FreeConomy
Part of the thinking is based on virality, but equating Freetardism to a parasite meme is inspired
However, if you are familiar with game theory, most simulations of these markets show that IF you can go free and thus rapidly create a market, and stay free longer than all the others (ie you are Last Man Standing in a sector) then you clean up.
Hence the continual "race for free" by VC backed companies
And hence the continual confuson of cause with effect by non-economists (and some snake oil peddlars) in the FreeConomy
I can understand your game theory statement. If you force everyone to compete free, but you were first to market, in particular because of the exponential growth many of these sites experience, you can build up the value of your sites to users on the back of the network effects (if your site is social/"web 2.0" that is; otherwise network effects won't deliver value to users) - and then hope that that extra user value, which your rivals don't have, is enough to keep them on your site when you start to monetize it (e.g. Facebook may be just about irreplaceable despite Beacon's unpopularity)
But the marketplace is so dynamic (yahoo search gained 4% market share in the last month!) and there's so much creative destruction, that really, the risk of doing business like that is stupendous. It's a mug's game.
---------
I don't however agree with calling the freevirus a meme. Like all viruses, the freevirus carries several genes/memes, all absolutely critical to its propagation.
One meme is Geu, (gift economy utopia). A hairy protein, often depicted in textbooks either wearing a beard, socks and sandals, or in a teenage bedroom, causing an edit war on the Karl Marx/Yochai Benkler wikipedia page whilst browsing ThePirateBay
Another is Lbe (low barriers to entry, which is expressed as the TGIAG ("two geeks in a garage") protein).
An important regulatory gene is SVCM, Silly VC Money. It up-regulates Lbe, freeing the Lbe protein from 'bootstrap' mode so that it can start wrecking the market (the organ) as it forces other cells to commit strategic suicide (apoptosis) just to compete for oxygen. This is an important gene, for its subsidy enables freevirus to briefly evade the market's immune system, namely free cash flow (or FCF for short)
Let's not forget Efe (Exit-Focused Entrepreneur), too busy trying to get anyone from Google into his rolodex to care much about creating longlasting value for society, the kind of value you can rely on your users appreciating enough to actually make your business sustainable long term. It modifies the activity of the TGIAG protein, making it cooperates better with SVCM despite being less useful to the cell
----------
Whilst alive, the host environment is remarkably gentle, so there's no natural selection for sustainability, just virality - and with the set of memes outlined above, there's none more viral than Freevirus A. But once the hosts start dying, then, other genes might start getting selected for, either for more gentle versions (alleles) that don't kill quite so quick (subscription instead of ad-funded) - like the HIV virus, which won't kill you for years whilst it infects people - or ones that don't kill at all, maybe even evolve to exist on their own, using the BTSTRP or OSS genes.
But the marketplace is so dynamic (yahoo search gained 4% market share in the last month!) and there's so much creative destruction, that really, the risk of doing business like that is stupendous. It's a mug's game.
---------
I don't however agree with calling the freevirus a meme. Like all viruses, the freevirus carries several genes/memes, all absolutely critical to its propagation.
One meme is Geu, (gift economy utopia). A hairy protein, often depicted in textbooks either wearing a beard, socks and sandals, or in a teenage bedroom, causing an edit war on the Karl Marx/Yochai Benkler wikipedia page whilst browsing ThePirateBay
Another is Lbe (low barriers to entry, which is expressed as the TGIAG ("two geeks in a garage") protein).
An important regulatory gene is SVCM, Silly VC Money. It up-regulates Lbe, freeing the Lbe protein from 'bootstrap' mode so that it can start wrecking the market (the organ) as it forces other cells to commit strategic suicide (apoptosis) just to compete for oxygen. This is an important gene, for its subsidy enables freevirus to briefly evade the market's immune system, namely free cash flow (or FCF for short)
Let's not forget Efe (Exit-Focused Entrepreneur), too busy trying to get anyone from Google into his rolodex to care much about creating longlasting value for society, the kind of value you can rely on your users appreciating enough to actually make your business sustainable long term. It modifies the activity of the TGIAG protein, making it cooperates better with SVCM despite being less useful to the cell
----------
Whilst alive, the host environment is remarkably gentle, so there's no natural selection for sustainability, just virality - and with the set of memes outlined above, there's none more viral than Freevirus A. But once the hosts start dying, then, other genes might start getting selected for, either for more gentle versions (alleles) that don't kill quite so quick (subscription instead of ad-funded) - like the HIV virus, which won't kill you for years whilst it infects people - or ones that don't kill at all, maybe even evolve to exist on their own, using the BTSTRP or OSS genes.
@ Phil - V Good - you need to be blogging, young man 
More accurately, the FreeVirus is a memeplex, imho it has injected the Free (cash) meme into a bunch of more worthy ones (Free rights etc etc).
I have always been interested with the parallels between human (and corporate) idea ecosystems and sociobiology - the similarities are striking.
More accurately, the FreeVirus is a memeplex, imho it has injected the Free (cash) meme into a bunch of more worthy ones (Free rights etc etc).
I have always been interested with the parallels between human (and corporate) idea ecosystems and sociobiology - the similarities are striking.
@alan p - I do blog, but it's very mixed up stuff, and only to distract me from revision! http://www.overthecounterculture.com
the reason I chose to study biochemistry was a fascination with the most beautifully complex, mixed up, messy, organised (paradoxical!) system of them all, the cell. So much feedback, feedforward, crossed messages, careful regulation. It's a beautiful chaos. Thinking about how to fuck with it (i.e. strategy!) is a tough but intellectually electrifying passtime. Probably not something I'll do after uni though, the Internet is probably where I'll hang my hat...
I wonder though if bioanalogy is just a wry, mildly interesting but largely useless activity, not a serious analytical tool - very amusing to get namechecked by fred wilson this morning though!
the reason I chose to study biochemistry was a fascination with the most beautifully complex, mixed up, messy, organised (paradoxical!) system of them all, the cell. So much feedback, feedforward, crossed messages, careful regulation. It's a beautiful chaos. Thinking about how to fuck with it (i.e. strategy!) is a tough but intellectually electrifying passtime. Probably not something I'll do after uni though, the Internet is probably where I'll hang my hat...
I wonder though if bioanalogy is just a wry, mildly interesting but largely useless activity, not a serious analytical tool - very amusing to get namechecked by fred wilson this morning though!
Sadly, if you were familiar (enough!) with game theory you would know that Nash himself has admitted that the theory was wrong, its model broken, and that people simply do not behave as the theory suggests (essentially due to altruism-like behaviour which provides evolutionary advantage.) All too many people have latched onto game theory. All too few have listened to the screaming of its failure.
On another (but not entirely unrelated) note, staying "free longer than all the others" isn't enough. It only allows you to "clean up" if, once you've gone non-free, your product is featured and priced competitively enough relative to the competition and to the cost to the user of moving from you to said competition.
These days, the feature sacrifices made during remaining free while others go non-free, together with the low cost for the user to move to the competition at any time, have proven to be very dangerous to both the companies that try to do it as well as to the market are around them, hence this entire article and the term "freetards" itself.
On another (but not entirely unrelated) note, staying "free longer than all the others" isn't enough. It only allows you to "clean up" if, once you've gone non-free, your product is featured and priced competitively enough relative to the competition and to the cost to the user of moving from you to said competition.
These days, the feature sacrifices made during remaining free while others go non-free, together with the low cost for the user to move to the competition at any time, have proven to be very dangerous to both the companies that try to do it as well as to the market are around them, hence this entire article and the term "freetards" itself.
very true, a point that was extremely well argued by Adam Curtis in The Trap.
doesn't change what I was saying about freevirus - hobbyists/nonselfish people - us hippies that believe in creative commons etc (and carry those attitudes and expectations, somewhat unreasonably, back to the marketplace) are freevirus carriers.
Just noticed that I'm wearing a Creative Commons T-shirt! crickey
doesn't change what I was saying about freevirus - hobbyists/nonselfish people - us hippies that believe in creative commons etc (and carry those attitudes and expectations, somewhat unreasonably, back to the marketplace) are freevirus carriers.
Just noticed that I'm wearing a Creative Commons T-shirt! crickey
Oh, definitely. And, as an aside, it was "alan p" I was taking to task re: game theory, not you. Just in case you took it personally.
As for the carriers of the "freevirus", I am in complete agreement. The key takeaway, for me at least, is that there is a point at which one crosses from carrying the "freevirus" to carrying the "freetardvirus", and that it is only the latter that is worrisome.
As for the carriers of the "freevirus", I am in complete agreement. The key takeaway, for me at least, is that there is a point at which one crosses from carrying the "freevirus" to carrying the "freetardvirus", and that it is only the latter that is worrisome.
Oh Goody - an argument about game theory AND altruistic sociobiology - geek heaven
I understand where you're coming from, but I have found that game theory still describes actions very well - the things that fail are the "rational" payoffs because people hate cheating behaviours, but you can factor this back into game theory.
I take your point re sacrifices made to win the survivala of the silliest, but thats option theory in action - if you win you have the option of seeing if there is a monetisable model at the end.
And I would argue the game theory of that option theory will drive the behanviours of players who are in the game.
I understand where you're coming from, but I have found that game theory still describes actions very well - the things that fail are the "rational" payoffs because people hate cheating behaviours, but you can factor this back into game theory.
I take your point re sacrifices made to win the survivala of the silliest, but thats option theory in action - if you win you have the option of seeing if there is a monetisable model at the end.
And I would argue the game theory of that option theory will drive the behanviours of players who are in the game.
I've been thinking since this post about the conflating of the "Free" (as in free rights, creative commons free to use etc) and Freetardism (ie Free to buy) and how it came about - they are not logically linked - ie I can believe in CC and paying creators for eg.
Provisional Decision - Freetards are hiding behind principled freedoms for their own ends. Whether this is because they are venal or dim (or both?) I don't know yet.
Provisional Decision - Freetards are hiding behind principled freedoms for their own ends. Whether this is because they are venal or dim (or both?) I don't know yet.
it's probably down to human's amazing aptitude to rationalise positions irrespective of actual motivations for an action or inaction, especially after the event itself. Or so Nicholas Naseem Taleb would argue, anyhoo.
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