Tuesday, March 29, 2011

Freelash - Reaping the rewards of our addiction to "free"

Reading both news articles and blogs about the trouble our current generations are having finding work prompted thought about the whys and hows of how we got to this place as a nation, even as a multi-national culture. No doubt you've heard about how so many youth with degrees are still having to live at home with their parents and take work that is in no way connected to their furthered education. We were crippled by the housing market and Wall Street taking a dive, to a lesser extent we were injured by the dot com bubble burst.

All this leads me to question how those industries got so much power and why other industries aren't filling the voids. I can't help but think it relates to the fact that, aside from food, a majority of what we consume has transitioned to new mediums we are accustomed to paying little or nothing for. I'm not saying most people got their iPods or PCs for free but more and more, we're expecting and getting a lot of stuff cheaply. This applies not just to digital product but also many household items. Much of these products are being sold at a level that is less than is healthy for most businesses. Part of the reason bigger businesses can sell things more cheaply is of course volume but they also rely on being able to consolidate positions and resources. This is efficient but not friendly to the millions of people who would otherwise have work to do. We're slowly choking ourselves to death.

I grew up with the rise of the digital age, I was one of the kids that marveled at all the cool stuff that you could do and create with computers. I was one of those kids that took advantage of the murky waters of digital music, movies, and software before the lines were clearly defined. Do you remember when every website out there was offering free mouse pads, email addresses, pens, and just about any other gimmick out there? Free information floating out there on the internet was touted as the opening to a new era of progress and jobs would be there to.... somehow. All that free certainly has accelerated progress in technology and has revolutionized many aspects of the infrastructure of our daily lives. The question now is at what cost that has occurred.

Music and movies are one immediate example of areas that have both been helped and hurt. One one hand you have unprecedented distribution opportunities. On the other, consumers are getting drowned in choice and we now burn through media at a rate never before seen. New becomes old incredibly fast and artists and producers get left in the dust or buried in the pile of new content that is continually being heaped on by everyone else trying to stay on top. Prices for that content are also falling which further hurts sustainability for any one artist, unless they get really really big of course. It can be argued that this ultimately leads to better quality for the consumer which in theory is potentially true. The problem with this is that the "consumer is king" model of business, while effective in drumming up business, is not responsible. What about the producers? What happens when the consumer's insatiable appetite eventually whittles down the producers to the bare bones and still demands more? What happens when we forget our civic responsibilities and stop caring about our neighbors being able to make a living doing what they do?

These are important questions and ones that have been largely ignored. We've been ignoring the tough questions and, like with the financial meltdown, we've just powered through with the motto of showing growth, even as we destroy the roots that would have sustained it. We're killing traditional media outlets like newspapers, magazines, and local news that have been identifiable, able to be held accountable, and been a pillar of how we've been able to develop this nation of information and progress. Granted, media organizations have also been hurting themselves but part of that is due to the mistake of putting the consumer on so high a pedestal. I'm not saying they should put producers, owners, or government on that pedestal either. There needs to be a commitment to truth, community, and sustainability first and foremost.

The "freelash" referred to in the title is how I'm choosing to describe the effects of our blind belief in using free to rope people in and/or just use advertisement revenue to sustain a business. Eventually it will backfire for consumers and the backlash is already showing up in the number of positions that are being eliminated to keep up with other bigger and leaner businesses. There is no such thing as free in business, someone will pay and it might actually be you after all. It's not just about the addiction to free though, it's also about things being cheap. Eventually it's not going to matter if something is cheap or not though because that quest will eventually leave many without a job and without money and it doesn't matter how cheap something is if you're flat broke.

Some things lend themselves to actually being able to offer things free to the consumer. Take mobile phones for example. The subscription fees and content revenue can definitely make up the loss on giving away the actual equipment. The manufacturers still get paid for their part, and consumers are essentially just hit with a payment plan as opposed to a single large charge. That's a pretty good win-win situation.

Online ad revenue for websites are still a bit shaky but can work for bloggers and a number of other content sites. The threat of clicking on ads leading to malware is still a hindrance to advertisements online being as effective as they could be but it still works to a decent degree. Still, most payouts to the content sites are very small.

For many smaller businesses "free to the consumer" just isn't sustainable.

All this translates into less consumers having a job and less consumers having the income to spend on anything other than necessities while a select few gain more and more market share to the point of monopoly or duopoly. What about competition though? Upstarts can rise and take over right? Yes. But in practice, you're just replacing one powerhouse with another and usually one will eventually fail. An ever-increasing population will need more and more occupation. Our drive for total efficiency inevitably constricts the number of available jobs. That drive for total efficiency is locked in because of our drive for cheap or free. It's a nasty engine that needs an overhaul if we intend to keep it functional.

There are solutions of course, but some that keep on the current course would lead to a less diverse job market for the vast majority of the population. This nation was built largely on people striving for the bettering of themselves and society. I fear that the loss of paying jobs in creative fields and other meaningful challenging work will stifle us and ultimately lead to the collapse of ideals and possibly worse.

The golden rule solves a lot or the problems we've gotten ourselves into. Paying a fair price for goods and services so we can enjoy them and also help sustain our neighbors and countrymen seems like the way to go. Let's see if we can't figure out how to beat the unhealthy parts of our addiction and keep moving forward.

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