Grand Unified Theory of Economics of Free

Mike Masnick has a terrific, brief post up about the economics of free and the scarce and infinite components of a company's offering. It's a thought provoking framework to think about scenarios such as "All music is legally free for consumers by 2015 — how do the artists make money?" Here's how Mike thinks a recording company should think about the economics of their business:

1. Redefine the market based on the benefits you're providing rather than the specific product you're selling. If you're a musician, for example, you're not just selling a specific song — you're selling the experience of musical enjoyment.

2. Break the benefits down into scarce and infinite components. An infinite good is something that costs nothing to give away to someone else. E.g., the music itself. Scarce goods are everything else — concerts, backstage passes, people's time and attention.

3. Set the infinite components free, syndicate them, make them easy to get — all to increase the value of the scarce components. When people can easily listen to your songs, they're more likely to get interested in your concerts or merchandise.

4. Charge for the scarce components that are tied to infinite components. E.g., charge for the concerts and t-shirts, access to the band becomes more valuable.

Most record labels stumble on Step 1: redefining their offering in broader terms. Same with newspaper companies. Most have a hard time thinking about themselves as news companies instead of newspaper companies.

Speaking of which, Marc Andreessen says the "game is completely over" when it comes to newspapers and that the New York Times should turn off the printing press tomorrow. I assume he would also say record companies should stop manufacturing CDs and distribute music exclusively online.

(thanks Jon Bischke for pointing me to this article)

The “Soundtrack of Your Life” Delusion

Ryan Holiday nails it:

Try spending the day listening to an iPod as you go about your business. How much more important it all seems. Put your hands in your pockets and start walking down the street. It's you, oh fearless warrior, and your battle against the world.

Welcome to the narrative fallacy.

God forbid you should ever have one with you when you're running and it begins to rain. If you don't have a shirt on, it's over. Out of the corner of your eye, you'll swear that trees are bowing as you pass.

Welcome to the "movie about your life."

Listening to an iPod while going about your business can also be a nice pick-me-up, I've found. And it does make you feel like you're in a movie.

A New Status Anxiety is Infecting Affluent Hipdom

The always-witty Sandra Tsing Loh has a piece in the latest Atlantic Monthly titled Class Dismissed: A new status anxiety is infecting affluent hipdom. It’s a Brooksian take on how the self-styled cool and rich are signaling status. I excerpt the best grafs below.

On the new search for self-expression:

In the relatively affluent post–Cold War era, the search for self-expression has evolved into a desire to not have that self-expression challenged, which in turn necessitates living among people who think and feel just as you do. It’s why so many bohemians flee gritty Los Angeles for verdant Portland, where left-leaning citizens pride themselves on their uniform, monotonously progressive culture—the Zipcars, the organic gardens, the funky graphic-novel stores, and the thriving alternative-music scene. (In the meantime, I’ve also noticed that Portland is much whiter than Los Angeles, disconcertingly white.)

On signaling one’s degree:

Even today, I think one’s relation to one’s alma mater is fraught with haute-bourgeois peril. In descending order of coolness are:

1. Dropped out of prestigious college;

2. Graduated from prestigious school, never bring it up unless asked—then as joke;

3. Graduated from prestigious school with honors, bring up quickly, no irony;

4. Graduated, have become garish, cheerful head of alumni booster committee.

On charity and the convenience of caring about the faraway poor:

Charity itself is complicated when one hates to admit that one rules. Although old-school WASPs might tinkle their G-and-Ts while hosting an annual spring benefit for The Poor, the creative class will throw a star-studded fete to combat a politically fashionable disease, with celebs relaying anecdotes about personal frailty (as detailed in their candid new addiction memoirs). They can be rich and feel vaguely anti-establishment at the same time. The New World is all Richard Branson interviewed by Charlie Rose onstage at the Clinton Conference on Global … Whatever—with a faint chunky mix-in of Third World Poverty. (The creative class usually prefers faraway poor people to the local variety, and always prefers the “ethnic” poor to the white kind.)

Great little anecdote on San Francisco and trusting Craiglist over the police:

In 2000, the research of Robert Putnam, author of Bowling Alone, showed that the correlation between the health of civic culture and the affluence of the local economy was actually negative; the highest-tech cities tended to have the lowest rate of civic connections. I think of the Silicon Valley runner guy we met in San Francisco who, when we showed him a set of lost car keys we’d found on the path in Golden Gate Park, said: “I wouldn’t trust the police with those. Post a notice on Craigslist!”

Rep. Peter Stark: An Exemplary Public Servant

Congressman Peter Stark (D – California) represents all that is great about American politicians: humility, wide-ranging and mature vocabulary, and a genuine warm-heartedness towards those interested in political issues.

Take his must-watch interview with libertarian Socratic Dialogue devotee Jan Helfeld discussing the national debt. Congressman Stark, tripped up after saying that a country's wealth increases as its national debt increases, tells the interviewer to "shut up." He then tries to end the interview by telling Helfeld to "get the fuck out of here or I'll throw you out the window." See the clip below.

Stark has quite a record. In a 2001 debate, he falsely stated that all of the children of Congressman J. C. Watts of Oklahoma were "born out of wedlock." In another debate, he called Congresswoman Nancy Johnson of Connecticut a "whore for the insurance industry" and suggested that her knowledge of health care came solely from "pillow talk" with her husband, a physician.

Elsewhere on the web, here are the Top 10 Most Disastrous David Letterman interviews ever. #10 is Joaquin Phoenix. The Madonna one is pretty funny. Here is a news release about heroic efforts to create braille pornography for blind people.

I thank Andy McKenzie, David Lee, and Chris Yeh for sending the above links. I'm sitting in this Hilton hotel room in South Carolina laughing my ass off, by the way. You know when you're laughing so hard that your muscles become weak? That's me. I can't get the damn bar of soap out of the little hotel package due to muscle weakness.

Three Things I’m Doing to Become Healthier and Smarter

1. I take four Kirkland Natural Fish Oil Omega 3 pills a day. Each pill has 1000 mg of total fish oil with 300 mg of DHA and EPA each. 1200 mg/day seems to be a good target amount. Here's a page comparing fish oil to flaxseed oil. Here are all of Seth Roberts' posts on Omega-3. Here is Tyler Cowen on his flaxseed oil supplement which he calls "good for his heart, brain, and gums" and says "the Omega-3 ingredient has a scientific consensus in its favor, with no evidence for negative side effects."

2. I'm tracking personal metrics. I'm starting with sleep and exercise. I record in Excel when I went to bed, when I woke up, and how many minutes I exercised. See the article titled You Are Your Data to learn about the burgeoning Quantified Self movement. I hope to track nutrition soon. And maybe one day I will be able to carefully track my time spent on different activities.

3. I'm interviewing local neuro-psychologists to see if they can help me understand how I learn. I am still unsure how I process information best. People with learning disabilities work with these folks. I don't think I have a learning disability but I do think I could do a better job at taking in information in ways that are optimal for my cognitive makeup. I'm also researching SPECT scans, but these have its critics and are expensive.

I'm not a self-improvement maniac. But I am on the lookout for ways to become healthier, happier, and smarter, and all these things seem likely to help in one or all of these fronts.

Thanks to Seth Roberts, Andy McKenzie, Tyler Cowen, and a Child of the Kemp for their direct or indirect advice.