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Why Information Providers Need To Be Open To Sharing in Their Business Models

By Joshua Gans

Information content providers, especially publishers of media (including books, news, journals, music and video), have been concerned that “information wants to be free.” The reason is obvious. If information wants to be free, it may be hard to make it expensive and get people to pay for it. Digitization has only increased these concerns because, at the very least, information is now costless to disseminate and copy. The economics, therefore, appear to be consistent with the free possibility. However, as Stewart Brand noted there are forces pushing information to be expensive as well because it can be valuable. The issue has been reconciling that with the notion that many consumers believe that information can and should be free.

Economics does have much to say about what information might want and it is not necessary to be free. If information wants something, it wants to be shared. Sharing is a mechanism by which potential consumers of information are alerted to both its existence and its value. Sharing from the right people prioritizes information and helps individuals manage their attention. Sharing information is an active process that better matches information with the right people. Significantly, one of the most significant impacts of digital technologies is that they have enabled a new era of sharing.

There is both a demand and a supply side to the notion of information sharing. In this article I want to focus on the supply-side question: How do you fund information creation? The traditional approach is to restrict access to it. That will create an artificial wall on the use of information and, in theory, provide users with a reason to pay to breach that wall.

But the tragedy of that is that it doesn’t cost providers anything more to distribute information to one or a million users. By restricting use, demand is restricted and some users who would pay something for that information do not have the opportunity to do so. Economists refer to this as the public good nature of information and suggest that it would be better to find ways of getting all users who value information to contribute something towards the cost of its production rather than to hit them with a one size fits all stick.

“It doesn’t cost providers anything more to distribute information to one or a million users. By restricting use, demand is restricted and some users who would pay something for that information do not have the opportunity to do so.”

But is there another way? The horror writer, Stephen King, thought so and in 2000, he offered to distribute his latest novel exclusively over the Internet—bypassing publishers and printers altogether, a more radical notion at that time than it would be today. The issue was how he was going to get readers to pay for it, and, in typical King style, he opted for a somewhat elaborate game.

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