Giving your value away…

As the weeks go by I’m more certain than ever that monetization of any intellectual capital-type efforts will be Internet-centric or people won’t give money in exchange for it — and, ironically, that giving value away over the Internet may become ‘table stakes’ to be in the content or software game.

Traditional distribution channels for intellectual capital (TV channels and non-online video, bookstores, video rental and music stores, industry publications and newsletters, learning in classroom or DVD, et al) can’t scale in the same way they can on the Internet. There is finite shelf space; it takes too long to deliver information when something is published and distributed; people want the information or training when they need it vs. when they can travel somewhere to learn it; and people are shifting their demand criteria anyway in a day of on-demand, always-available access.

Something you might not have considered is that people are also increasingly expecting complimentary sources for what they consume so they can get multiple points of view and perspective as well as having multiple sources to compare and from which to choose (it’s where my “experts don’t exist” mantra comes from since I demand more than one or two sources for anything). Shopping services; memetrackers to get multiple blogger points of view; voting sites (e.g., Digg) so the community decides which articles are most important and so on.

What’s unique in delivering intellectual capital-type efforts over the Internet is that more of us are expecting it to be delivered for free and many of us take advantage of it. The kicker? People simply taking the value without paying for it increases its intrinsic value IF the act of taking it in some way adds a form of personal perspective or influencer metadata above it and provides the intellectual capital-type efforts with more attention, importance, word-of-mouth buzz or informal guidance (premise based loosely on Kurzweil’s Law of Accelerating Returns).

Here are three examples.

1) A software example: Let’s say you and nine people you know start an open source software project. Each of you invest time, effort and energy in developing the project and it’s some kick-ass, free alternative to a commercially available product costing $50,000. While developing the project is an interesting exercise to replicate functionality and make it available for free, no one cares unless people download, install and use the project. The more people that use it (by taking rather than giving) increases the value of the project because a customer-base and ecosystem emerges around the project and more developers join increasing its value. This goes on through successive iterations until the project is a Wikipedia, Drupal, WordPress, or any of the other couple of hundred thousand amazing offerings in open source.

Open source gets noticed as more people take it and use it, and there are mechanisms in place (e.g., Sourceforge and other alert sites) that geeks and others go to discovering new projects or see those gaining momentum.

2) A literary example: Author (and a bunch of other stuff) Cory Doctorow wrote a book entitled, “Down and Out in the Magic Kingdom” and he convinced his publisher to give it away under a Creative Commons license and achieved 10,000 downloads in January of 2003 (current number of downloads is unavailable). Would I have purchased Down and Out? No. But I downloaded it, read it and developed an appreciation for Doctorow’s writing and thus purchased other books he’s written as have many people I know. In addition, one could argue that this book is a linchpin in the discussion surrounding copyright due to his Creative Commons license and granting of the creation of derivative works.

Doctorow is an interesting example because of his work at the cutting edge of geekdom and, especially, due to his ties to BoingBoing, one of the top 20 media sites on the internet. His visibility and fanbase make it easier to grab attention.

In a small way, I also experienced the power of giveaways and a value increase when I released Rise of the Participation Culture in November of 2006 (offline now as it’s undergoing a refresh) and received two new clients because of the report. I agonized over whether I should sell or just give it away, and now have had nearly 10,000 downloads of the PDF version and almost 7,000 unique views of the HTML version.

3) A music example: Radiohead, the British rock group that made the decision to allow downloads of their most recent album, revealed to the BBC that, “Radiohead has made more money from digital downloads of their new album ‘In Rainbows’ than digital sales of all the other Radiohead albums put together.” They simply asked fans to pay what they thought it was worth and apparently it was a phenomenally wise move. They don’t reveal numbers so there isn’t any independent audit and verification of this unprecedented move, but it points the way to distribution models of tomorrow. Again, I know many people who downloaded, listened to and now have purchased other Radiohead music and this created significant buzz (i.e., free advertising).

Radiohead has a fanbase they’ve built through traditional means already which made a move like this an instant news item and grabbed attention worldwide.

So does this mean you should just give your stuff away?  Not necessarily and for now (and for most of us) the answer is “no” unless you have methods in place to capture the attention of Internet-users or are willing to pay for search engine hits, advertisements or think you’re something special and can get a video to go viral.

I haven’t connected the dots fully on the implications of giving away to get attention and the mechanics of doing so. Most of us want (and need) to get paid for our efforts and anything intrinsically valuable means some people are willing to cough up money for what you offer.

The thing to examine is which of your efforts would gain traction with your current and prospective customers and what should you give away free and what should you charge for going forward. For most businesses, it’s easy to put a number of the cost of customer acquisition and make decisions about the buzz something free and valuable would have in any given industry or market. If it costs you $100 to acquire a customer (ad cost, sales costs, or some other metric) and you could acquire 10 customers for that same investment, I think you’d do it, heh?

Your circumstances are unique but I’d encourage you to do what I did with Rise of the Participation Culture (RPC): try it. Take something you’ve put effort in — that would meet a wide demand in the marketplace for your goods or services — and give it away (ask for email addresses in exchange). Track the return on your investment and I’ll bet you’ll be as delightfully surprised as I was with RPC.