'Free' is here to stay on the Web

Music publishers seem to have the upper hand for the moment in cracking down on free sharing of music files. But the future of commerce on the Web continues to look as though "free" will be a theme for a long time.

A Friday morning session at PopTech centered around "Digital Freedoms" and brought together three speakers who spend a lot of time thinking about the economy of the Web.

Online, attention (visitors) and reputation (links) have currency. This is the Google economy, says Chris Anderson, editor-in-chief of Wired magazine. You can think of Google's Larry Page as the Ben Bernanke, the central banker, of this Web economy, he says. Mr. Anderson, author of "The Long Tail," a seminal book on how the Web economy operates, wrote an article for Wired called "Free! Why $0.00 Is the Future of Business" and has a book by the same title on the way.

Free, of course, isn't always "free." There's money to be made around the core "free" offering. One example is the ABC NBC show "Heroes," which is "one of the most pirated TV shows on the web," says Matt Mason, a former pirate radio deejay in London and author of "The Pirate's Dilemma: How Youth Culture Reinvented Capitalism." While "Heroes" episodes can be found for free online, the show earned about $50 million from other sources last year, including comic books (using story lines that didn't make it on the air), webisodes, fan sites, and merchandise sales. The fans essentially took the core story and created a bigger universe for themselves.

Companies must compete with digital pirates who grab material online, Mr. Mason says. One success has been Apple's iTunes, which offers legal music downloads for a bargain price through a simple, convenient process (and no worries about what malware might be arriving with your new download).

Free-sharing online has been misunderstood, says Clay Shirky, who teaches at New York University and wrote the book "Here Comes Everybody: The Power of Organizing Without Organizations." The 1999 advent of Napster, the once free (and once illegal) music-swapping website, brought two chief reactions, he says: "The world is going to hell in a hand basket – today's youths are a bunch of criminals," was one response. "We're entering an age of Krishna consciousness – a new age where the rules have completely changed," was another.

Neither is right, Mr. Shirky argues.

What Napster did do was make it easy to be generous (easy to allow others to copy files on your computer for themselves) and reward people for being generous (they get lots of free stuff back).

Shirky points to websites like Howard Forums, where 500,000 users share ideas on using their cellphones, and Grobanites for Charity, fans of the singer Josh Groban who have organized themselves into a charitable foundation. Neither of these started as a business or with profit in mind, but they captured the enthusiasm of a group to become a valuable venture.

"We've forgotten that people have all sorts of reasons to do things" besides monetary gain, Shirky says.

Organizations or individuals looking to generate these kinds of self-organized sites will need to find the delicate balance between giving participants the autonomy to shape the group and providing some necessary constraints, he says.