Posted on Sun, Jan. 13, 2008

Donor built millions on $11 an hour

By Joe Logan

INQUIRER STAFF WRITER

RICHLAND, N.J. - Paul Navone worked in mills in and around Vineland for 62 years, never earning more than $11 an hour. He buys his clothes in thrift shops. He doesn't own a phone. And he doesn't have a TV: The last thing he recalls watching was Neil Armstrong walking on the moon in 1969.

Yet through a combination of frugal living and smart, disciplined investing, the 78-year-old retiree from nearby Millville was able to give $1 million to Cumberland County College last month.

And on Wednesday, at a gala to honor major donors, Navone was recognized for a $1 million gift to St. Augustine College Preparatory School in Richland, Atlantic County.

"It's my pleasure," said Navone, smiling into a small sea of flashbulbs and TV cameras at the celebration.

Navone, a lifelong bachelor who never had children and lives alone, is said by those who know him well to be both slightly overwhelmed by and totally digging his unexpected time in the spotlight.

He won't reveal his net worth, but Navone still enjoys what he calls a "comfortable cushion" of funds. It's more than enough for breakfast with his retiree friends most days at McDonald's, where he calls a bingo game one morning a week; for more used CDs; for filling up the tank of his '88 Isuzu SUV to make daily trips to the library or the mall.

"I never denied myself anything," Navone, smallish and spry, said at the St. Augustine gala.

Growing up "church mouse" poor in Depression-era Vineland taught this son of Italian immigrants never to want too much and to hoard money whenever it came his way. Navone's father was a laborer on the railroad. His mother was a homemaker who, with her five children, tended the family's small farm.

The day he turned 16, Navone left the eighth grade and applied for a factory job at Wheaton Glass in Millville. When he got his first paycheck two weeks later - Navone was earning 75 cents an hour - he thought he was a Rockefeller.

"I was in seventh heaven," he said. "I had always wanted a long overcoat, and I got it."

After that indulgence, Navone, who lived with his parents, began to squirrel away his hard-earned wages.

At 21, he joined the Army and spent two years assigned to the base post office in West Germany. Back home, Navone moved in with an older sister until he had saved $6,500. With that stake, he bought his first property. He moved into one half and rented out the other.

"I lived on the income the one unit provided me, and I saved my wages from work," Navone said.

Not just saved, invested. He acquired a second rental property, then a third. Eventually, with the advice of stockbrokers, Navone expanded his investments.

"Paul has always been the perfect client. He gave me money and never took it out," said his broker of 20 years, R. Douglas Smithson, senior vice president for investments at Wachovia Securities in Vineland. "He took my advice, he stuck to a plan, and he reaped the benefits of it."

Even now, with ample money for bling, Navone prefers the simple life. He lives alone in a small, single-family house in Millville. And although some recent accounts have described him as a bit of a recluse, that's not quite accurate.

"He's really quite charming and witty," said Sue Ann Perry, executive director of the foundation at Cumberland County College, who lunches regularly with Navone.

"Paul doesn't let many people close," Smithson said. "He has good, close friends. There just aren't too many of them."

Smithson can recall being inside Navone's house only once, years ago. When he needs to speak to Navone, Smithson has to drive to his client's house or drop a note in the mail asking him to call.

His is a contented life, Navone said. He has never missed radio or TV. "I have no need for them," he said.

"Early on, shortly after I went out on my own, I bought a small television," he recalled. "I only had it a short time, and I seldom looked at it."

He prefers listening to the radio at night, or one of his hundreds of CDs. "Any kind of music, except I'm not particular for jazz," he said. "I like big band or serious stuff."

Navone loves newspapers, but he has never read a book in his life. "I don't know the first thing about books," he said, almost proudly.

He has never dated, which he attributes to a long-ago trauma.

"This is rather personal," Navone said, beginning a tale about a girl he had a crush on as a 16-year-old. She contracted tuberculosis and died. "After that, I was always afraid," he said.

His clothes? "Everything I'm wearing is from thrift shops," he said, waving his hand like a wand over his outfit: off-white slacks, a wool fisherman's sweater, and loafers.

"Well, maybe not my underwear and socks," he said.

During his years in factory and mill work, Navone never aspired to a management job and life wearing a necktie.

"I punched a time clock every day," he said. "Salaried people are committed for 24 hours a day. If something breaks down, they have to go in and fix it, and they still only get their agreed-upon wages."

When he began to give away his money, nobody was more surprised to learn of his wealth than the friends who thought they knew him.

"They're shocked," Navone said, laughing. "I said, 'What am I supposed to do, wear a plaque on a string around my neck that says, "I'm rich"?' "

Why is Navone giving away his money now?

For years, Smithson urged his client to draft a will. Otherwise, the broker said, a court would divide up his estate. But Navone didn't know where he wanted the money to go.

"Six months ago, he came to me and said, 'I think we need a will,' " Smithson said. He said he wanted to do something with his money that was sure to produce "value."

After considering various options, Navone settled on St. Augustine Prep and Cumberland County College, a surprise to both schools.

At the college, where Smithson is on the board of the school's foundation, the newly refurbished Healthcare Education Center will bear Navone's name. At St. Augustine, which just opened a $21 million multipurpose complex, the Olympic-size pool is now known as the Navone Pool, dedicated to Novone's parents, Secondo and Adele.

"I never had the pleasure of a swimming pool," said Navone, who also recently presented houses to a local Catholic church and museum.

As he made his way back to the gala at the high school the other night, the mild-mannered philanthropist mulled what financial advice he might give others.

"My motto back then without realizing it - and it is now - is that I'll work for the money, and then I want the money to work for me," he said.

---

Contact staff writer Joe Logan at 856-779-3220 or jlogan@phillynews.com.

A Generous Gift From A Frugal Giver

Retired Factory Worker Paul Navone Saved His Money For 50 Years And Then Gave It Away

http://www.cbsnews.com/stories/2008/01/18/assignment_america/main3730424.shtml

MILLVILLE, N.J., Jan. 18, 2008

Paul Navone spent his life working in mills, never earning more than $11 an hour. Yet he managed to save enough money to donate $1 million to a New Jersey college and another million to pay for a high school swimming pool, Friday, Jan. 18, 2008. (CBS)

(CBS) At a ceremonial dinner at New Jersey’s St. Augustine College Preparatory School, everyone complied with the dress request for coat and tie.

Everyone but Paul Navone.

Navone, 78, showed up in a sweater he’d bought at the Salvation Army for $3.

"Everything I had on was from a thrift shop. As it is where I'm sitting right here now," Navone says.

Fact is, this frugal retired factory worker would never spend money on new clothes, vacation or swanky meals. Really. The only reason he came to this dinner honoring the school's rich new benefactor -- is because he is the school's rich new benefactor.

So begins the story of the unlikely philanthropist.

Navone was born dirt poor and never made more than $11 an hour. He put in 50 years at the glass factories in Millville, New Jersey, working all the overtime he could get.

“I saved. Why would I go home?” Navone asked CBS News correspondent Steve Hartman. “I didn’t have a life.”

He didn’t have a wife or children or a phone or a television. All of which are reasons he was able to save most of his paycheck and let it grow.

"Different people have asked me, 'What were you saving for?' Really, never in my life did I save for a specific purpose," says Navone.

Until, at 78, he finally gave it some thought. He drove over to the local Catholic high school where they were trying to raise money for a swimming pool - and made a huge splash.

The reaction, says Navone, was total amazement.

As a result of all the compounding interest, Navone was able to donate a million dollars for what is now the Navone Pool.

He also gave another million dollars to Cumberland County College for their new nursing education program.

Paul says that it feels good to be rid of those savings -- perhaps because after all these years he figured out what he'd been saving for.

“What I invested in is enriching people’s lives,” says Navone.

© MMVIII, CBS Interactive Inc. All Rights Reserved.

More Killing Please! - Palestinian Conflict and the American Civil War

SPENGLER
More killing, please!

"I think people are sick of [killing]," said President George W Bush of the Israeli-Palestinian war. The contrary may be true. People may want the killing to continue for quite some time, as the Palestinian radical organizations suggest. A recurring theme in the history of war is that most of the killing typically occurs long after rational calculation would call for the surrender of the losing side.

Think of the Japanese after Okinawa, the Germans after the Battle of the Bulge, or the final phase of the Peloponnesian War, the Thirty Years War, or the Hundred Years War. Across epochs and cultures, blood has flown in proportion inverse to the hope of victory. Perhaps what the Middle East requires in order to achieve a peace settlement is not less killing, but more.

Mut der Verzweiflung, as the Germans call it, courage borne of desperation, arises not from the delusion that victory is possible, but rather from the conviction that death is preferable to surrender. Wars of this sort end long after one side has been defeated, namely when enough of the diehards have been killed.

Don't blame the president's provincialism. This has nothing to do with Bushido, Nazi fanaticism or other exotic ideologies. The most compelling case of Mut der Verzweiflung can be found in Bush's own back yard, during the American Civil War of 1861-1865. The Southern cause was lost after Major General Ulysses S Grant took Vicksburg and General George G Meade repelled General Robert E Lee at Gettysburg in July 1863. With Union forces in control of the Mississippi River, the main artery of Southern commerce, and without the prospect of a breakout to the North, the Confederacy of slaveholding states faced inevitable strangulation by the vastly superior forces of the North.

Nonetheless, the South fought on for another 18 months. Between Gettysburg and Vicksburg, the two decisive battles of the war fought within the same week, 100,000 men had died, bringing the total number of deaths in major battles to more than a quarter of a million. Another 200,000 soldiers would die before Lee surrendered to Grant at Appomattox in April 1865. The chart below shows the cumulative number of Civil War casualties as the major battles of the war proceeded.



The chart is demarcated into sections labeled "Hope" (prior to Gettysburg and Vicksburg) and "No Hope". Geometers will recognize a so-called S-curve in which the pace of killing accelerates immediately after Gettysburg and Vickburg and remains steep through the Battle of Cold Harbor, before leveling off in the last months of the war. Not only did half the casualties occur after the war was lost by the South, but the speed at which casualties occurred sharply accelerated. The killing slowed after the South had bled nearly to death, with many regiments unable to field more than a handful of men.

In all, one-quarter of military age Southern manhood died in the field, by far the greatest sacrifice ever offered up by a modern nation in war. General W T Sherman, the scourge of the South, explained why this would occur in advance. There existed 300,000 fanatics in the South who knew nothing but hunting, drinking, gambling and dueling, a class who benefited from slavery and would rather die than work for a living. To end the war, Sherman stated on numerous occasions these 300,000 had to be killed. Evidently Sherman was right. For all the wasteful slaughter of the last 18 months of the war, Southern commander Lee barely could persuade his men to surrender in April 1865. The Confederate president, Jefferson Davis, called for guerilla war to continue, and Lee's staff wanted to keep fighting. Lee barely avoided a drawn-out irregular war.

What will happen now in the Middle East? At the outbreak of the war, Grant and Sherman were unknown. They rose to command because the nerve of their predecessors snapped at the edge of the abyss. The character of the war was too horrible for them to contemplate. Bush's nerve appears to have snapped, as I predicted ( Bush's nerve is going to snap, March 4), "The danger is that America will find itself fighting a sort of Chechnyan war on a global scale. President George W Bush cannot wrap his mind around this," I wrote then. "The blame lies at the doorstep of the neo-conservative war-hawks who persuaded the president that America should undertake a democratizing mission among a people who never once voted for their own leaders."

For that matter, Ariel Sharon's claim before last week's Likud party congress that Israel had achieved victory against terrorism was both accurate and misleading. Wars do not end when they are won, but when those who want to fight to the death find their wish has been granted. Sherman's 300,000 fanatics could not face the mediocre circumstances of a South without slaves and were willing to die for their way of life.

Three million Palestinians packed into a narrow strip of land one day may accept the modest fate of a small and impecunious people, but their young people do not seem ready to do so. We do not know how many ever will. The killing will continue for some time before we find out.

(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)

Horror and humiliation and Chicago
By Spengler

What causes the Reverend Jeremiah Wright to imagine that "the government gives [young black men] the drugs, builds bigger prisons, [and] passes a three strikes law" to incarcerate them? It is the same kind of unbearable grief that still causes white Southerners to believe that their ancestors fought the Civil War for a noble cause? It is too humiliating to think that the miscreants had it coming.

An uncanny parallel links the fate of young African-Americans today and that of the young white men of the slave-holding South in 1865. Both cohorts have lost a terrifying proportion of their number to violence. One third of black Americans between the ages of 20 and 30 passed through the criminal justice system in 1995, according to the Sentencing Project, a prisoners' advocacy group. Nearly a third of military-age Southern men military age were killed or wounded during America's Civil War. [1]

It is a measure of the inherent good-heartedness of Americans that they evince a low threshold of horror. Three hundred thousand Confederate dead and millions of ruined African-American lives are too awful to contemplate. Some part of Senator Barack Obama's appeal derives from America's revulsion over the destruction of a generation of young black men; electing an African-American president would assuage part of the guilt.

From this great suffering arise two genres of American popular culture, the Gone With the Wind ilk of Civil War epic, and the "Get Rich or Die Tryin'" brand of gangsta tale. Both try to take the edge off the revulsion and placate the dishonored dead by turning them into folk-heroes. That is understandable, but also unfortunate, for America still has a great deal of killing left to do around the world, and might as well get used to it.

"Get Rich or Die Tryin'" would have been a good epitaph for the Confederate dead, who fought for land and slaves, not for "states' rights" or the sanctity of their soil. Slave-owners along with want-to-be slave-owners had it coming. The Union general William Tecumseh Sherman who said after he burned Atlanta, "I fear the world will jump to the wrong conclusion that because I am in Atlanta the work is done. Far from it. We must kill three hundred thousand, I have told you of so often, and the further they run the harder for us to get them."

Given the sad history of racial oppression in the South for a century after the Civil War, the only thing to regret is that Sherman didn't finish the job. I stopped watching the film version of Gone With the Wind after Scarlett O'Hara saved her plantation from the tax-collector. I wanted her to pick cotton until her back broke.

It is appalling that the criminal justice system has devoured one out of three young African-Americans, to be sure, but the number must be too small, because the police will have failed to apprehend some who still commit crimes. I did not attempt to watch the film Get Rich or Die Tryin'. I want the police to incarcerate such people before they commit enough crimes to fill a screenplay.

Europeans are far more attuned to horror. They have had the opportunity to get used to it. Cannibalism was rampant in 17th-century Germany during the Thirty Years' War, and in the Ukraine during Joseph Stalin's 1931 starvation. Americans abandoned the horrors of the Old World. Terrible as the Civil War may have been, it spared civilians. Sherman burned his way from Atlanta to the sea in 1864, but the number of rapes and murders committed by his soldiers can be counted on one's fingers.

Nonetheless, there is no market for Hollywood epics about Sherman's March to the sea, arguably the most brilliant military campaign in the history of American arms, while the film industry still grinds out kitsch about the supposedly gallant losers. Perhaps one should feel sorry for the impoverished privates who bled for the Confederacy. Few had slaves, yet they fought stubbornly to preserve slavery, because they hoped that they, too, would obtain land and slaves as the victorious Confederacy became a hemispheric empire. I have expanded on this subject elsewhere (Happy birthday, Abe - pass the blood Asia Times Online, February 10, 2004).

The embittered fighters of the South sacrificed themselves in proportions unsurpassed in modern history, excepting the Serbs in World War I. But there was no honor, no gallantry, and no nobility in the blood-letting. They fought for empire and advancement, like Albrecht von Wallenstein's freebooters of the Thirty Years' War or Napoleon's ambitious Grande Armee. Sherman's belief that the war objective was not to occupy this or that piece of territory, but to kill 300,000 men, was almost exactly correct: the final total of Confederate dead was 289,000, just 11,000 short of Sherman's estimate. Perhaps the 11,000 men Sherman failed to kill were the founders of the Klu Klux Klan.

In fact, Sherman's superior, General Ulysses S Grant, did far more of the killing. Sherman burnt property and humiliated the South on their home soil. But a people that has given its all for a defeat that is too terrible to recall with clarity has nothing left but pride, and the wounded pride of the South has turned Sherman's memory into a curse.

Southerners thought of themselves as an oppressed people, the descendants of Scots-Irish immigrants driven out of their Celtic homelands by the English, flying the X-shaped cross of Scotland's patron saint in the Confederate battle flag, redolent of Scotland's "Lost Cause". The self-pity of the South pervades American popular culture, from Margaret Mitchell's Gone with the Wind, to The Band's bathetic song, "The Night They Drove Old Dixie Down". It is best known in the cover version by Joan Baez, an old civil rights campaigner. Such is the pull of identity politics.

With good reason, the descendants of Scots villagers expelled from the Highlands after the rebellion of 1746 may have thought themselves oppressed. Because they came from oppressed folk, their passion to better themselves burned all the more fiercely. When they set to build a slave empire, they could be stopped only by killing so many of them that insufficient numbers were left to form the ranks. The South fought on with redoubled ferocity after the twin Union victories of 1863, Vicksburg and Gettysburg, made Confederate victory improbable. Most Southern casualties, I reported in an earlier essay (More killing please!, Asia Times Online, June 13, 2003), occurred after Southern hopes had faded, and the South surrendered only after its manpower was too depleted to continue.

Sherman, who lived in the South and had many close Southern friends, understood that the ambitions of the South could be quelled only by a sea of blood. He is the decisive personality of the Civil War, yet there never has been a single cinematic treatment of the man. Twenty-one films, by contrast, portray Jesse James, the Confederate guerilla turned outlaw. He is the 50 Cent of the old South.

I do not mean to draw a moral equivalency between would-be slave-owners and the descendants of slaves, but the functional parallel is compelling. According to the Sentencing Project, "More than 60% of the people in prison are now racial and ethnic minorities. For black males in their twenties, one in every eight is in prison or jail on any given day. These trends have been intensified by the disproportionate impact of the 'war on drugs', in which three-fourths of all persons in prison for drug offenses are people of color."

A generation of African-Americans has been decimated. Murder is the leading cause of death among young African-American men; an American black has a 5% lifetime probably of becoming a murder victim (against a 0.7% probably for a white American).

Wright offers one sort of explanation: it is all due to a conspiracy by a racist government that wants to exterminate black people. The comedian and actor Bill Cosby now is touring America to offer a different explanation: the problems of African-Americans stem from a lack of individual responsibility, especially among men. In the May 2008 issue of The Atlantic Monthly, Ta-Nehesi Coates reports on a Cosby event in Detroit, writing, "Cosby had come to Detroit aiming to grab the city's black men by their collars and shake them out of the torpor that has left so many of them - like so many of their peers across the country - undereducated, overincarcerated, and underrepresented in the ranks of active fathers."

Cosby speaks pure sanity to black Americans, but the circumstances are enough to make a man crazy - Wright, for example. Sanity is conveyed through humiliation. If young black men are killed in the commission of petty crimes, Cosby told a civil rights conference in 2004, it is their own fault:

Looking at the incarcerated, these are not political criminals. These are people going around stealing Coca-Cola. People getting shot in the back of the head over a piece of pound cake! And then we all run out and are outraged, "The cops shouldn't have shot him." What the hell was he doing with the pound cake in his hand?

It is horrific to die young, and humiliating to die for the wrong reason. Living with the humiliation is the beginning of recovery. But Wright and his congregation cannot bear the horror and humiliation any more than the average white Southerner, who after a few Bourbons will tell you, "The South shall rise again!"

Americans need a higher threshold for horror. Tragedies sometimes must play themselves out, and the losers must be allowed to lose. Whole peoples can go bad, and sometimes it is necessary to prevent them from doing evil by winnowing their ranks. It is just as perverse to excuse Wright's paranoid outbursts as it is to perpetuate the self-consoling myth of the gallant slave-holding South. America will be on the right track when it celebrates Sherman instead of 50 Cent.

Note
1. Nearly four-fifths of Southern white men served in the Confederate Army, and of these, half were wounded and a quarter were killed

Technology Wants To Be Free - "Commodities prices tend to zero"

Technology Wants To Be Free

Last February during a break at the most recent TED conference I was speaking to Chris Anderson, current editor in chief at Wired about his planned next book, called FREE. (While we were talking, we were photographed and posted on Flickr by the co-founder of Flickr himself! How cool is that?) Nearly 10 years ago I had written a chapter in my thin New Rules for the New Economy book that focused on the role of the free and the economics of plentitude. I called that chapter “Follow the Free.” Almost nothing I’ve written has been as misunderstood as this short chapter. I’ve not had a Q+A session since then without this question coming up: “You say we should embrace the free. How can everything be free?”

The truth is that the concept of the free is easily misunderstood. Thus I applaud Chris’ brilliance in devoting a whole book to unraveling the mess. There’s much to be said about it, and even then we’ll just be at the beginning of understanding what free means. I originally thought I was done with the subject 10 years ago, but the continual questions, as well as the continual evolution of the commons, new social dynamics, new technological disruptions, and further research in the decade since have surfaced some new ideas. In particular I’ve concluded the free is deeply entwined into the very foundation of technology. I was sharing some of those emerging half-baked thoughts with Chris in the lobby of TED. Since that conversation I’ve discovered that the tie between technology and the free goes even further than I thought. My current conclusion can be summarized simply: Technology wants to be free.

Let me state it more precisely: Over time the cost per fixed technological function will decrease. If that function persists long enough its costs begin to approach (but never reach) zero. In the goodness of time any particular technological function will exist as if it were free.

This seems to be true for almost anything we make: basic things like food stuffs and materials (often called commodities), and complicated stuff like appliances, as well as services and intangibles. The costs of all these (per fixed unit) has been dropping over time, particularly since the industrial revolution. According to a 2002 paper published by the International Monetary Fund (“The Long-Run Behavior of Commodity Prices” by Paul Cashin and C. John McDermott, PDF), “there has been a downward trend in real commodity prices of about 1 percent per year over the last 140 years.” For a century and half prices have been headed toward zero.

Real Price of Industrial Commodities, 1862-1999 (Cashin and McDermott)

Let’s take just one example, the dropping cost of copper. Plotted over time, the graph of its price drifts toward the free (in the chart below the real price is pink). While it will keep heading toward zero, the curve follows a mathematical pattern. Assuming the functions remain the same the price will never reach its limit of the absolutely free. Instead it steadily creeps closer and closer to the limit, in an infinite series of narrowing gaps. This pattern of paralleling the limit but never crossing it is called approaching the asymptote. The price here is not zero, but effectively zero. In the vernacular it is known as “too cheap to meter” -- too close to zero to even keep track of.

As skeptics like to ask, “Well, if this is the destiny of everything we make how come my laptop is not free?”

So a couple of caveats. The first detail to keep in mind is that the cost over time (particularly over long periods of time) have to be normalized to account for inflation or depreciation. With inflation increasing the price of everything in the economy some 4% a year, an item could be headed toward the free at 3% a year and you would never notice it by looking at the dollar price. It would still rise 1% a year. So we need to readjust the dollar amounts each year to dial back the effects of inflation and other changes in the value of money itself. This is usually done in economics by calculating the inflation-adjusted prices relative to a designated year. It’s as if the old prices are quoted in a foreign currency and need to be converted to today’s US dollar. The new series of recalculated prices are known as “constant” dollars. In theory these prices should reflect the “real price.” Of course in everyday life we work with current dollars, and so in many cases a slow decline towards the free may not be as visible.

The more important detail is that the unit of function must remain fixed to be visible. It is relatively easy to track the real price of a ton of copper over time because a ton of copper 50 years ago is almost (I’ll explain that almost in a minute) the same as a ton of copper today. A chunk of this metal may be more (or may be less) desirable now, but its function, its service, its essence remains the same. Incidentally, the real price of copper is headed toward the free.

However the functions of stuff changes over time. Even commodities, which seem stable, can change over time. The purity of copper and other metals has been increasing. The nutrient levels of corn rise. The quality of basic commodities 50 years ago would simply be rejected today. In consumer goods, the evolution is revolutionary. Your laptop today may seem like the same laptop you had several years ago, but it ain’t. We still call it a laptop, but it is essentially an entirely new species of technology. The track of its price over time is thereby disrupted by the fact that its performance has changed while its name remained the same. If we wanted to track the real price of the laptop you owned three years ago a better approach would be to track the price of used versions of it on eBay. After deducting a penalty for it being used versus new, it is very clear that the cost of that generation of laptop – even if we could buy a brand new copy of it today -- is headed toward zero. And fast.

Brad Delong, economist at Berkeley, has studied the long-term shift in utility of goods. He writes:

“The wholesale city price of raw foodstuffs today amounts to four percent of consumer expenditure. It amounted to 20 percent a century ago.”

So at first glance, the fixed unit of “foodstuffs” is headed in real dollars down and down. But then he adds,

“Yet the share of food in household budgets has shrunk not by a factor of five but by a factor of two.”

What gives? The usual problem: even something as simple as modern foodstuffs have extra value that we ordinarily don’t perceive.

“The difference is that today much preparation is done outside the household: mixing, chopping, pre-cooking, combining, freezing, and processing all make cooking a meal a much less time-consuming process today than it was a century ago. Our food bill today seems so large because we count a very large share of the meal production process as a market expenditure. A century ago, much of this process was hidden inside the household and was never registered through a market exchange. To a large extent, Americans today are like rich Edwardian Britons in that they do have cooks. But today the counterparts of the last century's domestic servant cooks work outside the household, for companies like Nabisco, using very capital- and machine-intensive production processes.”

In other words, any service or product that can be easily defined will become a commodity and drop towards zero. The definition of a commodity is partly that which is a fundamental ingredient for other goods and partly that which is fixed in utility. The simplicity or complexity of a good is not really central to whether it is a commodity. If its utility function has become fixed by use, its price will head toward zero. A one minute voice phone call is an incredibly sophisticated, technically complex good, but its utility is fixed (one minute of okay sounding conversation) so it is quickly headed to being free.

What is not fixed – and not free – is telecommunications. Consumers and manufacturers want increasing voice quality, additional features (call forwarding), and all kinds of things that were never imagined paired with telephones before. So while the commodity of one minute of basic voice becomes free, your telephone bill continues to rise. Over time, every successful luxury becomes defined by its use and the other goods that piggyback on it. It then becomes a commodity.

GPS was a novelty luxury only a few years ago. It was expensive. As its technical standards spread into mapping services and hand helds, it becomes essential, and the basic service (where am I?) will become a commodity and free. But as it drops toward the free, hundreds of additional advance GPS functions will be added to the fixed function so that more people will pay ever more for location services than anyone pays now. Where-am-I information will be free and ubiquitous, but new services will be expensive at first.

No one finds this very radical; it’s almost econ 101. But when you start to point out that everything we make – including very physical and material goods, like airplanes and skyscrapers – are susceptible to becoming commodities, and very quickly, doubt sets in.

Sometime around 1998, shortly after my New Rules for the New Economy article appeared in Wired I was invited to speak to KLM executives in Amsterdam. I guess someone in middle management at the Dutch airline had seen my piece and thought that the rest of the staff needed to hear the full story. I wasn’t sure what I was going to tell an old-Europe industrial airline company but the gig was in Amsterdam so naturally I accepted. My speaking slot was an after dinner talk. The KLMers had a tour around the canals of Amsterdam, some drinks and then me. I spent a lot of time explaining the dynamics of the new free in the context of an intangible economy. I was quoting from my own book:

As crackpot as it sounds, in the distant future nearly everything we make will (at least for a short while) be given away free—refrigerators, skis, laser projectors, clothes, you name it. This will only make sense when these items are pumped full of chips and network nodes, and thus capable of delivering network value.

And then I ended with a custom prediction and what I thought was a very helpful model of how they could explore the free. Imagine, I said, if you made your airline seats free. Getting on a particular flight would be free, or almost free, or “as if” free. A customer would pay for everything else around that flight: the meal, hauling their luggage, movies, taxes, and maybe even the reservation. A person who walked up with no reservation, no luggage, didn’t want a meal, or rent headphones, might be able to fly for the cost of the taxes and airport fees if there was room. The cost of air transport per mile was headed toward the free, anyway, I explained. They should get used to the idea. Look, I said, Even if you find this prospect too radical, you have to begin to think in these terms because your certainly competitors will.

After some polite applause, a silver haired gentleman draped his arm around my shoulder and introduced himself. You could tell he was powerful. Charming and persuasive even before he said anything. He was the CEO, or chairman of KLM, or some bigwig, I can’t quite remember exactly. “Young man,” he whispered into my ear, “that was the most ridiculous talk I’ve ever heard.” He was serious in that Dutch way. I gulped. I wasn’t trying to be ridiculous -- provocative, perhaps -- but maybe my imagination had finally just gone too far. I mean the idea does sound pretty extreme. I didn’t have any evidence of it really happening. Maybe I had been living in California too long and need to get out of the country more. I thanked him for his honesty as politely as I could, and packed up my stuff and left.

However that encounter didn’t cure me of my habit of pushing the limits of the free. A little bit later I gave a talk to some automobile folks. Most of cost in making an automobile these days lies in the silicon electronics, computer chips, and in the work of assembly, and not in the actual steel and rubber needed to make its body. All the added premium values -- like GPS navigation, sound system, security, smart brakes – are certainly in the silicon. This makes a car primarily a “chip with wheels.” Automobiles, like air travel, are headed in direction where all software and digital devices are headed: toward the free. Imagine, I said, if you could give away a very basic no-frills car for free. It would be free to customers who agreed to buy all the fuel, insurance, maintenance and repairs to keep it going, as well as add ons, upgrades, and services like navigation, music and satellite radio from the maker. Sort of like getting a free cell phone for a five year contract from the carrier. But now you get a car for free with a five year contract. Not all cars would be free, of course, but at least one would be, and that one would redefine the competitive landscape for all car makers. No one came up afterwards to tell me I was ridiculous, but no one said my vision was inevitable either.

A few weeks ago, a Silicon Valley entrepreneur announced he has secured funding to build electric cars that will be given away to customers who buy the electricity from his company. We’ll see how well that works. But we know the principle of the free works in airplanes. Several years after my KLM talk, Ryanair took Europe by storm. Selling some tickets for a little as $36, Ryanair offered seats on planes within Europe “as if” they were for free. Riders paid essentially just the airport taxes. In fact many travelers complain that the bus fare to and from the often remote airports was more than the cost of the international plane ticket. In the context of the former monopolies exercised by nationalized airlines, of which KLM was one, double-digit airline seats were made “free.” Although Ryanair was launched in 1985, it wasn’t until the late 90s that it morphed into an industry disrupter. Inspired by Southwest Airlines and liberated by European airline deregulation, it remade itself into a low-cost airbus. Its real rocket to growth began in 2000 when it boldly moved its reservation system on to the web, allowing it to bypass the cost and time lag of travel agents and market directly to mobile young flyers. (It’s hard to remember that until very recently we all had to hire travel agents to book our flights.) Ryanair grasped the “free” approach. First they turned their customers into their own unpaid travel agents, and then they provided only basic seats and charged for the rest. A traveler got an almost free seat, but no free anything else. In a sign of things to come, in 2006 Ryanair began charging to check luggage. The result: their passenger-miles-flown have increased 25% annually for the past decade. And KLM? They had to merge with Air-France.

While Ryanair prospers giving away seats as if they were free, it is crucial to keep in mind that premium-priced executive jet taxis are booming at the same time. For many times more than you would pay for a commercial flight (it may set you back $100,000 a year), you can hire a jet service fly you to the same destination in a much smaller cramped plane on your own schedule. Private jet travel is now the fastest growing sector of aviation. As the free expands, so does the expensive.

This is an important point. There is more than one service being offered by an airplane, or a cell phone, or a car. The pure locomotive aspect of a car or plane is only one commodity. A car will move you from A to B, but it also offers privacy, immediacy of travel, a portable office, an entertainment center, status, and design joy. As a consumer you can balance those qualities you want for free and those you want to pay for. You can get a car that moves you for free, but you may have to pay for the sound and navigation system. Or you may pay for the car and the sound and navigation system free. How about either a free flight, and pay for luggage, or a paid flight and free luggage? All these options make the consumer king, because you pick and choose where you want your free.

We should expect to see the same range of zero-price options in cell phones and other electronic gizmos. You can get a free phone, and pay for connect time. Or someday we’ll be able to choose an expensive paid phone with free connect time. Or free phone and free connect time, but expensive social/location functions.

Almost any product or service can be unbundled into various combos of functions, where one of the strands is priced as free, while the others remain expensive. Razors and razor blades, printers and ink cartridges, banks and checking accounts are some of the ones we already have. But the promise of the network economy is that the zero price option is now – or soon to be -- available in every realm we can imagine. Food, clothes, medicine, shelter, transportation, as well as media. Even “impossible-to-be-free” areas like space travel, medical care, and real estate will all exhibit zero-price options. I will gladly wager that the cost per kilogram to launch material into orbit will eventually be “as if” zero, that custom medicines per dose will head toward the free (but you’ll pay for your DNA profile), and that even some rental properties will display the zero-price option.

But while we can expect the zero-price option (ZPO) in all industries and all major products and services, the corresponding counter price for the bundled functions will vary all over the place, often expensively. Somewhere refrigerators will be free, but the conditional functions (either buy all your food from Whole Foods, or pre-pay for electricity, or subscribe to a meal inventory program) definitely will not be zero. I like to think of it as the Zero-Price Uncertainty Principle. If you fix the price of one facet to zero, you can’t fix any of the other facets to zero. Only one function at a time can be fixed at zero.

To be clear, the ubiquity of the ZPO is within the domain of the commodity; it is an option for the consumer. It doesn’t mean the ZPO is available everywhere, only that some company somewhere will offer the ZPO for each function.

So what about Google? One after another of their products are free. Free email, free calendar, free docs, free design tool, free maps, and of course free search. Is it breaking the ZPO Uncertainty Principle? Well, each of these products has its own dynamic and zero-point options. Google has the same opportunities with them that all producers have. They offer free commodities and charge for premium services. Search is free; yet they charge enterprises for custom Google search. Or they shift their customer from reader to advertiser; in Google’s eyes the chief audience for search is advertising companies, whom they charge. Or they develop additional functions and services, like desktop versions, which they can sell. At least for a while, until they too become commodities.

The zero-price option, which was once very rare, is now being driven to ubiquity by network effects. In the last century ZPO could usually be ignored because the needed conditions for it to play out were unusual and specialized. ZPO plays off the ability of networks to scale up explosively, increasing value towards infinity overnight. As members are added to a network linearly the value of the network increases exponentially, which charted looks “as if” it were headed toward infinity. The compounding numbers of members made commoditization possible, fluid, and fast. In fact the curve toward the asymptotic free and the exponential infinite are essentially the same curve on different axis. This pairing lead to a joke during the dot come boom that “the two most important numbers in new economy are zero and infinity.” Zero price, infinite upside. There is some truth to this.

If technology wants to be free, where does this compulsion reside? I believe it emanates from the networks of communication within the technium which surrounds each good. Orthodox economics teaches that every producer is trying to maximize price but will “minimize the maximum” in response to competition. The more “perfect” the competition, the stronger the drive to lower prices. The major inventions in the last 20 years have been vast improvements in communication and market mechanisms, which have accelerated the ‘perfection” of the market. Innovations such as easy reverse auctions, ubiquitous small-price auctions, searchable discounts, price aggregators, outsourcing clearinghouses, real time quotes, instant always on connection – all conditions these squeeze fluff out of the system all along the creation chain and push prices downward relentlessly. In this flat world there’s no harbor from the natural pressure toward free.

Additionally, this same network of communications spreads learning fast and furious. The news of how to make something more efficient travels almost instantly from the inventor to the entire technium. Tools such as online patents and reverse engineering techniques as well as great mobility among workers all contribute to promiscuous exchange of learning. Further, advanced technologies that encourage cooperation and collaboration permit faster invention and distribution of those inventions, which in turn permit the competitive pressure for lower prices to take effect quicker and deeper. Finally, the market for the finished goods is boosted by easily assembled networks which can gain members quickly. The more units produced or consumed, the faster the learning cycle for efficiency and price reduction. These five traits of networked technology – perfect market competition, price transparency, innovation sharing, collaboration, and expanding markets – ceaselessly push technology toward the free.

But while there may be unending pressure toward free, is there anything inherent in technology that suggests it can actually reach close to free?

There is an unarticulated assumption held by many people that the natural state of any created thing is expensive. Technology is believed to be born dear and costly, and it is only through relentless hard work that things can be made cheap. Indeed, according to this perspective, everything is naturally expensive, and would remain so, but for genius and sweat. This natural level of expense and scarcity can only be lowered by applying constant energy, favorable legislation, and technological vigilance, otherwise the price of a good may spring back up to its natural elevated level. God forbid a disaster or calamity collapses the system and allows the prices of everything to revert to their true unattainable price.

The parallel analogy applies to our bodies, an analogy we intuitively understand. Without constant food and reasonable maintenance, our bodies would falter, succumb to disease and die. Energetically the natural state of our tissue-filled body is death. Left alone, it, like all complex things, will slide toward entropy, disorder, and extinction. To keep it elevated in life requires a constant stream of uplifted energy, food, care, repairs and attention.

Yet while that is true, it is also true that health is a natural state of our bodies. Our complex living system rebels against disease, flees from death, and seeks the persistent flux of good health. The many complex biological system of our bodies – lymph, nervous, gastric, skeletal, cardiac, mental – all conspire to keep us aimed in a self-sustaining state, way above the disorder of entropy. In many ways this self-sustaining state of good health is more natural, or at least as natural, as the state of death. Indeed it is a mark of an extropic system like a living body that the whole system is engineered to remain in this self-sustaining state as long as possible. In a very real sense, health, not death, is our true home.

Likewise with technology. Made things favor not the entropic regime of high prices, but the extropic realm of the free. Eternal expensive scarcity is unnatural and unsustainable, while the abundant free is the ideal home for all things created. The technium conspires to guide manufactured items toward the free, where they can unleash their maximum good. The free, not the costly, is the true home of technology.

Technology migrates in this direction because of the self-reinforcing, self-creating aspect of the free. I can best illustrate this force through an example of my own experience. Twenty five years ago search was very expensive. One company held a monopoly on access to online search, and their fees could run up to hundred of dollars per hour. In 1981 I enrolled in a short course to learn how to search online. It was so expensive you had to plan out your search in minute detail before you dared logged on. Like most searchers then I found searching while a clock was ticking off dollars every minute to be nerve wracking and debilitating. Because of the expense there was no room for frivolous questions, like searching for your own name, or for old classmates. Search was constipated, restricted to straight ahead library-like queries. You could not do anything with search because each one set you back many dollars.

Contrast that to today, when search is free. Not only can we use search to find anything, the free abundant search function is the basis for useful contextual advertising, annotated maps, incredibly useful shopping tools, and a legion of other consumer benefits, not to mention hundreds of business, if not an entire industry of novel inventions. Search has been liberated by becoming free. As its price reduced, it found its way into more of the technium, and it found more of its talents revealed. As search headed toward the free, it was used in more ways, ways that would neither work while it was expensive, and ways that were invisible while it was expensive. As it became free, it became more indispensable in the ecology of the technium, and more instrumental in unleashing other technologies. It also became a factor in driving other technologies toward the free. In this way it is like health; free technologies tend to enable other technologies toward the free, in a self-sustaining, self-creating loop.

George Gilder once noted there was a self-reinforcing positive feedback loop in miniaturization of technology. Smaller chips ran cooler, which allowed them to run faster, which allowed them to run cooler, which allowed them to be made smaller. And so on. There is a similar self-reinforcing positive feedback loop in the free-ization of technology. Nearly-free goods permit waste and experimentation, which breed new options for that good, which increase its abundance and lower its price, which generate more new options, which permit further novelty. And so on. These loops work on each other, compounding the effects between techniques and goods, and supercharging the entire ecology of technologies with an unstoppable momentum towards the free and towards unleashing new capabilities and possibilities.

The odd thing about free technology is that the “free as in beer” part is actually a distraction. As I have argued elsewhere (see my 2002 New York Times Magazine article on the future of music for example) the great attraction of “free” music is only partially that it does not cost anything. The chief importance of free music (and other free things) is held in the second English meaning of the word: free as in “freedom.” Free music is more than piracy because the freedom in the free digital downloads suddenly allowed music lovers to do all kinds of things with this music that they had longed to do but were unable to do before things were “free.” The “free” in digital music meant the audience could unbundled it from albums, sample it, create their own playlists, embed it, share it with love, bend it, graph it in colors, twist it, mash it, carry it, squeeze it, and enliven it with new ideas. The free-ization made it liquid and ‘free” to interact with other media. In the context of this freedom, the questionable legality of its free-ness was secondary. It didn’t really matter because music had been liberated by the free, almost made into a new media.

Technology wants to be free, as in free beer, because as it become free it also increases freedom. The inherent talents, capabilities and benefits of a technology cannot be released until it is almost free. The drive toward the free unleashes the constraints on each species in the technium, allowing it to interact with as many other species of technology as is possible, engendering new hybrids and deeper ecologies of tools, and permitting human users more choices and freedoms of use. As a technology grows in abundance and cheapness, it is more likely to find its appropriate niche which it can sustain itself and support other technologies in commodity mode. As technology heads toward the free it unleashes the only lasting thing it can: options and possibilities.

Posted on November 14, 2007 at 2:57 PM

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Better Than Free

Better Than Free

The internet is a copy machine. At its most foundational level, it copies every action, every character, every thought we make while we ride upon it. In order to send a message from one corner of the internet to another, the protocols of communication demand that the whole message be copied along the way several times. IT companies make a lot of money selling equipment that facilitates this ceaseless copying. Every bit of data ever produced on any computer is copied somewhere. The digital economy is thus run on a river of copies. Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free.

Our digital communication network has been engineered so that copies flow with as little friction as possible. Indeed, copies flow so freely we could think of the internet as a super-distribution system, where once a copy is introduced it will continue to flow through the network forever, much like electricity in a superconductive wire. We see evidence of this in real life. Once anything that can be copied is brought into contact with internet, it will be copied, and those copies never leave. Even a dog knows you can't erase something once it's flowed on the internet.

This super-distribution system has become the foundation of our economy and wealth. The instant reduplication of data, ideas, and media underpins all the major economic sectors in our economy, particularly those involved with exports -- that is, those industries where the US has a competitive advantage. Our wealth sits upon a very large device that copies promiscuously and constantly.

Yet the previous round of wealth in this economy was built on selling precious copies, so the free flow of free copies tends to undermine the established order. If reproductions of our best efforts are free, how can we keep going? To put it simply, how does one make money selling free copies?

I have an answer. The simplest way I can put it is thus:

When copies are super abundant, they become worthless.
When copies are super abundant, stuff which can't be copied becomes scarce and valuable.

When copies are free, you need to sell things which can not be copied.

Well, what can't be copied?

There are a number of qualities that can't be copied. Consider "trust." Trust cannot be copied. You can't purchase it. Trust must be earned, over time. It cannot be downloaded. Or faked. Or counterfeited (at least for long). If everything else is equal, you'll always prefer to deal with someone you can trust. So trust is an intangible that has increasing value in a copy saturated world.

There are a number of other qualities similar to trust that are difficult to copy, and thus become valuable in this network economy. I think the best way to examine them is not from the eye of the producer, manufacturer, or creator, but from the eye of the user. We can start with a simple user question: why would we ever pay for anything that we could get for free? When anyone buys a version of something they could get for free, what are they purchasing?

From my study of the network economy I see roughly eight categories of intangible value that we buy when we pay for something that could be free.

In a real sense, these are eight things that are better than free. Eight uncopyable values. I call them "generatives." A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold.

Eight Generatives Better Than Free

Immediacy -- Sooner or later you can find a free copy of whatever you want, but getting a copy delivered to your inbox the moment it is released -- or even better, produced -- by its creators is a generative asset. Many people go to movie theaters to see films on the opening night, where they will pay a hefty price to see a film that later will be available for free, or almost free, via rental or download. Hardcover books command a premium for their immediacy, disguised as a harder cover. First in line often commands an extra price for the same good. As a sellable quality, immediacy has many levels, including access to beta versions. Fans are brought into the generative process itself. Beta versions are often de-valued because they are incomplete, but they also possess generative qualities that can be sold. Immediacy is a relative term, which is why it is generative. It has to fit with the product and the audience. A blog has a different sense of time than a movie, or a car. But immediacy can be found in any media.

Personalization -- A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room -- as if it were preformed in your room -- you may be willing to pay a lot. The free copy of a book can be custom edited by the publishers to reflect your own previous reading background. A free movie you buy may be cut to reflect the rating you desire (no violence, dirty language okay). Aspirin is free, but aspirin tailored to your DNA is very expensive. As many have noted, personalization requires an ongoing conversation between the creator and consumer, artist and fan, producer and user. It is deeply generative because it is iterative and time consuming. You can't copy the personalization that a relationship represents. Marketers call that "stickiness" because it means both sides of the relationship are stuck (invested) in this generative asset, and will be reluctant to switch and start over.

Interpretation -- As the old joke goes: software, free. The manual, $10,000. But it's no joke. A couple of high profile companies, like Red Hat, Apache, and others make their living doing exactly that. They provide paid support for free software. The copy of code, being mere bits, is free -- and becomes valuable to you only through the support and guidance. I suspect a lot of genetic information will go this route. Right now getting your copy of your DNA is very expensive, but soon it won't be. In fact, soon pharmaceutical companies will PAY you to get your genes sequence. So the copy of your sequence will be free, but the interpretation of what it means, what you can do about it, and how to use it -- the manual for your genes so to speak -- will be expensive.

Authenticity -- You might be able to grab a key software application for free, but even if you don't need a manual, you might like to be sure it is bug free, reliable, and warranted. You'll pay for authenticity. There are nearly an infinite number of variations of the Grateful Dead jams around; buying an authentic version from the band itself will ensure you get the one you wanted. Or that it was indeed actually performed by the Dead. Artists have dealt with this problem for a long time. Graphic reproductions such as photographs and lithographs often come with the artist's stamp of authenticity -- a signature -- to raise the price of the copy. Digital watermarks and other signature technology will not work as copy-protection schemes (copies are super-conducting liquids, remember?) but they can serve up the generative quality of authenticity for those who care.

Accessibility -- Ownership often sucks. You have to keep your things tidy, up-to-date, and in the case of digital material, backed up. And in this mobile world, you have to carry it along with you. Many people, me included, will be happy to have others tend our "possessions" by subscribing to them. We'll pay Acme Digital Warehouse to serve us any musical tune in the world, when and where we want it, as well as any movie, photo (ours or other photographers). Ditto for books and blogs. Acme backs everything up, pays the creators, and delivers us our desires. We can sip it from our phones, PDAs, laptops, big screens from where-ever. The fact that most of this material will be available free, if we want to tend it, back it up, keep adding to it, and organize it, will be less and less appealing as time goes on.

Embodiment -- At its core the digital copy is without a body. You can take a free copy of a work and throw it on a screen. But perhaps you'd like to see it in hi-res on a huge screen? Maybe in 3D? PDFs are fine, but sometimes it is delicious to have the same words printed on bright white cottony paper, bound in leather. Feels so good. What about dwelling in your favorite (free) game with 35 others in the same room? There is no end to greater embodiment. Sure, the hi-res of today -- which may draw ticket holders to a big theater -- may migrate to your home theater tomorrow, but there will always be new insanely great display technology that consumers won't have. Laser projection, holographic display, the holodeck itself! And nothing gets embodied as much as music in a live performance, with real bodies. The music is free; the bodily performance expensive. This formula is quickly becoming a common one for not only musicians, but even authors. The book is free; the bodily talk is expensive.

Patronage -- It is my belief that audiences WANT to pay creators. Fans like to reward artists, musicians, authors and the like with the tokens of their appreciation, because it allows them to connect. But they will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators. Radiohead's recent high-profile experiment in letting fans pay them whatever they wished for a free copy is an excellent illustration of the power of patronage. The elusive, intangible connection that flows between appreciative fans and the artist is worth something. In Radiohead's case it was about $5 per download. There are many other examples of the audience paying simply because it feels good.

Findability -- Where as the previous generative qualities reside within creative digital works, findability is an asset that occurs at a higher level in the aggregate of many works. A zero price does not help direct attention to a work, and in fact may sometimes hinder it. But no matter what its price, a work has no value unless it is seen; unfound masterpieces are worthless. When there are millions of books, millions of songs, millions of films, millions of applications, millions of everything requesting our attention -- and most of it free -- being found is valuable.

The giant aggregators such as Amazon and Netflix make their living in part by helping the audience find works they love. They bring out the good news of the "long tail" phenomenon, which we all know, connects niche audiences with niche productions. But sadly, the long tail is only good news for the giant aggregators, and larger mid-level aggregators such as publishers, studios, and labels. The "long tail" is only lukewarm news to creators themselves. But since findability can really only happen at the systems level, creators need aggregators. This is why publishers, studios, and labels (PSL)will never disappear. They are not needed for distribution of the copies (the internet machine does that). Rather the PSL are needed for the distribution of the users' attention back to the works. From an ocean of possibilities the PSL find, nurture and refine the work of creators that they believe fans will connect with. Other intermediates such as critics and reviewers also channel attention. Fans rely on this multi-level apparatus of findability to discover the works of worth out of the zillions produced. There is money to be made (indirectly for the creatives) by finding talent. For many years the paper publication TV Guide made more money than all of the 3 major TV networks it "guided" combined. The magazine guided and pointed viewers to the good stuff on the tube that week. Stuff, it is worth noting, that was free to the viewers. There is little doubt that besides the mega-aggregators, in the world of the free many PDLs will make money selling findability -- in addition to the other generative qualities.

These eight qualities require a new skill set. Success in the free-copy world is not derived from the skills of distribution since the Great Copy Machine in the Sky takes care of that. Nor are legal skills surrounding Intellectual Property and Copyright very useful anymore. Nor are the skills of hoarding and scarcity. Rather, these new eight generatives demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can't be replicated with a click of the mouse.

In short, the money in this networked economy does not follow the path of the copies. Rather it follows the path of attention, and attention has its own circuits.

Careful readers will note one conspicuous absence so far. I have said nothing about advertising. Ads are widely regarded as the solution, almost the ONLY solution, to the paradox of the free. Most of the suggested solutions I've seen for overcoming the free involve some measure of advertising. I think ads are only one of the paths that attention takes, and in the long-run, they will only be part of the new ways money is made selling the free.

But that's another story.

Beneath the frothy layer of advertising, these eight generatives will supply the value to ubiquitous free copies, and make them worth advertising for. These generatives apply to all digital copies, but also to any kind of copy where the marginal cost of that copy approaches zero. (See my essay on Technology Wants to Be Free.) Even material industries are finding that the costs of duplication near zero, so they too will behave like digital copies. Maps just crossed that threshold. Genetics is about to. Gadgets and small appliances (like cell phones) are sliding that way. Pharmaceuticals are already there, but they don't want anyone to know. It costs nothing to make a pill. We pay for Authenticity and Immediacy in drugs. Someday we'll pay for Personalization.

Maintaining generatives is a lot harder than duplicating copies in a factory. There is still a lot to learn. A lot to figure out. Write to me if you do.

[Translations: Chinese, French, Italian]

Posted on January 31, 2008 at 6:21 PM

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23 surprising things you can get for free

(RealSimple.com) -- Sometimes you get what you don't pay for. Here are nearly two dozen of the best freebies and -- most important -- how to score them.

Free education
• Massachusetts Institute of Technology. Get your geek on: MIT offers a far more comprehensive selection of free online courses than other universities -- nearly its entire undergraduate and graduate curriculum. Downloading materials takes minutes. A newsletter highlights new offerings, from Quantum Physics to American Women Authors.

What's the Catch? Users can't enroll, take classes on campus, or earn degrees.

Find Out More: http://ocw.mit.edu/index.html

• BBC, FrenchPodClass. The BBC offers top-notch online and MP3 lessons in languages familiar and obscure, including French, German, Portuguese, Mandarin, Greek, and Urdu. FrenchPodClass has easy-to-use, enjoyable podcasts that allow you to learn French while you do errands or go for a run.

What's the Catch? Classes are one size fits all, which fast learners may find sluggish (and slow learners may find difficult).

Find Out More: http://ocw.mit.edu/index.html, http://www.frenchpodclass.com/

Free classes

• U.S. Small Business Administration. Learn how to write a business plan, register your company, and deal with the tax details of running a home business at your local Women's Business Center evening classes (men are welcome, too).

What's the Catch? Novices and more advanced learners share the same classroom.

Find Out More: http://www.sba.gov/localresources/index.html (click on "Local Resources" for a nearby center and for financial and marketing information).

• Apple Stores. Apple gives excellent classes on business and entertainment software, music programs, and computer basics, all remarkably free of sales pitches. There are also classes on how to use Apple hardware, like iPods. Most of the company's stores -- there are more than 170 -- offer several classes a day.

What's the Catch? All classes relate to (often pricey) Apple products.

Find Out More: http://www.apple.com/retail/ (click on "Visit an Apple store").

Free culture

• Museum visits. While some museums don't charge an admission fee, others can cost $20 and up (more than a movie!). Take advantage of free days, half days, and nights that take place weekly or monthly at various institutions throughout the United States.

What's the Catch? The free-admission times tend to attract large crowds; expect long lines and less of an opportunity to get up close and personal with a Cézanne.

Find Out More: Check out the Web sites of your local museums.

• Music Together, Music for Aardvarks, Gymboree. These three companies all offer a complimentary peek at exactly what baby music classes entail (hint: plenty of drumbeating, rattle shaking, and scarf throwing). It's a great way to introduce your little one to the experience before shelling out $135 to $255 for a full term (generally 10 to 12 weeks).

What's the Catch? Many parents have been taking classes together for a while, so they can be quite chummy. As an observer, you might feel left out and too shy to participate fully.

Find Out More: http://www.musictogether.com/ClassLocator.aspx, http://www.musictogether.com/ClassLocator.aspx, http://www.musictogether.com/ClassLocator.aspx.

• Kids' Night on Broadway. Once a year (this year it was in late January), children ages 6 to 18 can experience the Great White Way for free with a full-paying adult. There are also Kids' Nights for nationally touring shows throughout the year.

What's the Catch? Tickets go very fast, especially for the most popular shows.

Find Out More: http://www.kidsnightonbroadway.com/kids.php.

Tip: To find out about free movies and concerts in your area, go to Yahoo or Google and type in the kind of entertainment, "free," and the name of your city.

Free gyms

• Health-club trials. LA Fitness, Bally Total Fitness, the Sports Club/LA, and Gold's Gym have a range of free-trial offers, from one day to two weeks, for prospective members, as do many other gyms throughout the country. Rules vary.

What's the Catch? You often have to tour the health club with a sales representative, which sometimes takes as long as an hour. Some gym companies may require you to prove nearby residence with a driver's license.

Find Out More: Go to the gyms for details.

Free photos

• Adorama, Dotphoto, Kodak, Snapfish. In addition to photo sharing and online albums, these popular services provide 15 to 50 free prints when you sign up.

What's the Catch? You have to pay for shipping, which usually isn't more than a few dollars.

Find Out More: https://www.dotphoto.com/join.asp http://www.snapfish.com/registration

Free pets

• Craigslist Community Pet Listings, Petfinder.com. Unlike shelters, most of which charge a small adoption fee, these sites feature numerous free-pet notices posted by owners, usually as a result of an impending move or an allergic family member.

What's the Catch? Not all the owners who post notices are as honest as you'd wish. Out-of-control animals can be listed as "friendly and calm."

Find Out More: www.craigslist.org (click on your city, then on "Pets"), www.craigslist.org (click on "Classified Ads").

Free phone services

• The Popularity Dialer. Want to flee that meeting? Get out of lunch after an hour? The Web-based Popularity Dialer can place one of five fake calls: the boss call, the cousin-in-need call, the male-friend call, the female-friend call, or the affirmation call (reminding you that you're wonderful). Each recording includes convenient pauses for your side of the conversation.

What's the Catch? You need to know beforehand that you'll want rescuing  and you have to be willing to break social graces by taking a phone call in the middle of a meeting or lunch.

Find Out More: www.popularitydialer.com.

• 800-FREE-411. Instead of dialing 411 and being charged 50 cents to $1.50, call this service, from a cell or a landline, for free nationwide directory assistance.

What's the Catch? You have to listen to a 20- second ad before receiving your number.

Find Out More: 800-373-3411 (800-FREE-411).

• Skype. Download and install free Skype software and call other Skype users, computer to computer, at no charge, anywhere in the world. If you have a webcam, you can see whom you're chatting with, too.

What's the Catch? If you don't have DSL or a cable modem, it may be more cost-effective (money- and sanity-wise) to dial up the old-fashioned way.

Find Out More: www.skype.com.

Free e-mail reminders

• Memo to Me. Avoid visits to the "belated birthday" or "so sorry I missed our anniversary" section of your local card store. Memo to Me reminds you before the event. Just plug in your e-mail, choose a password, and program the events you need to be reminded of and when you need the reminders. Whether it's Grandma's 80th or your own anniversary, no one wants to be the one who forgets.

What's the Catch? There's some innocuous advertising on the Web site.

Find Out More: www.memotome.com.

Tip: E-cards have gotten less corny. You can find witty and well-designed cards at www.hipstercards.com, vintage ones at www.cardcow.com, and photographic ones at ecard.digiart.ee.

Free ice cream

• Ben & Jerry's Free Cone Day. On one day every year (this year, April 17), all of the more than 600 Ben & Jerry's stores worldwide offer free cones, with no limit -- eat all the Cherry Garcia you'd like.

What's the Catch? There are often long lines, and popular flavors, like Chocolate Chip Cookie Dough, run out early.

Find Out More: www.benandjerrys.com for stores.

Free used books

• PaperBackSwap.com, TitleTrader. List the books that you'd like to get rid of, then wait for someone to request one, which can take as little as eight minutes. Mail your book to the person and you'll receive a credit to choose your own book. PaperBackSwap.com involves only paperbacks, which keeps shipping cheap, usually about $1.60 per book. TitleTrader also lists DVDs, CDs, and VHS cassettes and can rack up higher costs with heavy hardbacks, though shipping rarely tops $4 at the book rate.

What's the Catch? Popular fiction moves fast, while classic and esoteric titles may stay put for months.

Find Out More: www.paperbackswap.com, www.titletrader.com.

Free household items

• The Freecycle Network. This nonprofit community group with an environmental mission lets users "recycle" unwanted items by posting ads on local online bulletin boards. If you see a chair or a computer that you'd like, respond to the ad. The site is a great way to acquire a perfectly good coffeemaker or piano while doing your part to reduce waste.

What's the Catch? You're responsible for getting the stuff home.

Find Out More: www.freecycle.org to find a group.

Free (and worth it) samples

Many free-product programs come with hidden costs. The ones below are legit. Sign up for one and your in-box may be inundated, but there's also an outside chance you'll end up with a flat-screen TV.

• Start Sampling (www.startsampling.com) connects manufacturers with consumers who test products. Type in your demographic information and you'll see a screen listing your free-sample options -- everything from cleaning products to Harlequin romance novels to toiletries.

• Kiehl's (800-543-4572) hands out samples of every product it sells  approximately 10 million giveaways a year. Request samples at a Kiehl's store (where the selection is usually larger) or a Kiehl's counter in a department store. Or call Kiehl's and tell the operator what you'd like to try and the company will send you up to three samples.

• Programs from American Consumer Opinion and E-Poll (www.acop.com, www.epoll.com) allow users to take product surveys to get cash ($4 to $25 per survey), samples (ranging from pizza sauce to even the rare flat-screen TV), or points (which can be redeemed for gift cards from retailers such as Amazon.com and Target).

• Oil of Olay's sample program (www.olay.com; click on "Samples & Offers") gives away small sizes of its newest products.

• Sephora stores (www.sephora.com for locations) offer generous samples from the more than 150 cosmetics lines they carry. Just ask and a salesperson will hand you a packaged sample or fill jars with requested products for free.

• Procter & Gamble's Home Made Simple and Tide e-newsletters (www.homemadesimple.com, www.tide.com) entitle you to discount coupons and new-product samples. E-mail to a friend

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Frugal living more about priorities than sacrifice

NEW YORK (AP) -- When mathematics professor Annalisa Crannell needs new clothes, she doesn't head for the mall or outlet stores or even discount stores.

Annalisa Crannell holds a blanket she made from old shirts and an old sheet.

Crannell is an aficionado of Goodwill Industries shops. And she'll pass by the racks with $7 blue jeans and head for the bins where the jeans sell for $1. She's also happy to take friends' castoffs.

"Am I the biggest tightwad on the planet?" asks Crannell, a resident of Lancaster, Pennsylvania. "No. But I'm more frugal than most of the people I know."

A lot of people could learn from Crannell, who teaches at Franklin & Marshall College, and others who have adopted thrifty habits that they feel are both ecologically sound and help them cope with the rapidly rising costs of food, fuel and other necessities.

The word "frugal" might sound a bit old-fashioned, but the concept is as modern as today, says New York financial planner Stacy Francis.

"Keeping track of where your money goes is the most important financial task you can undertake," she said. "It really doesn't matter what you make. It matters what you spend."

She said many people didn't worry much about money when the stock market was rising, home values were soaring and the job market was solid. Those conditions have changed, and "when cash is tight, spending needs to get tighter, too," Francis said.

Some people have turned frugality into a lifestyle.

Annette and Steve Economides of Scottsdale, Arizona, try to live the life they describe in their book, "America's Cheapest Family Gets you Right on the Money."

The Economides, who don't use credit cards, believe consumers need to avoid debt, spend less than they earn and embrace a thrifty lifestyle.

"It's not about sacrifice, it's about priorities," Annette Economides says.

The couple suggests people start on the road to frugality by making a spending plan.

"Some people think 'budget' is a four letter word," Steve Economides said. "It's not. And it's not a noun either. It's a verb. And it's an action verb."

Budgeting requires a family to estimate future spending, based on what has happened in the past, and to set aside money to cover what a family considers important, he said.

What if it doesn't look like the money will go far enough? That's where frugality comes in.

Take grocery shopping. The average American family of four spends between $800 and $900 a month on food, Steve Economides said. By shopping more carefully, a family can cut that in half, he said.

The Economides, who have four children, watch the store circulars and ads so they can stock up when items they use frequently are on sale.

"Around Thanksgiving, when turkey goes on sale for 35 to 40 cents a pound, we buy several," she said.

They limit meals out in restaurants, plan menus in advance to take advantage of seasonal -- and thus cheaper -- produce, and use coupons to hold down food costs even further.

They shop just once a month, to reduce the time they have to spend in stores -- and the gasoline they use to get to and from the supermarket.

For Crannell, frugal spending in some areas, like clothing, frees up money to be spent on things she cares more about.

She and her husband, Neil Gussman, invested in energy-efficient windows for their home several years ago. She walks to work, but when she does drive it's behind the wheel of a Toyota Prius Hybrid car, which runs on gas and electricity.

Crannell likes yard sales, especially those where an entire neighborhood cooperates because there's a bigger selection. She shops at a local farmers market and sometimes makes vegetarian meals, partly because she believes they're healthy and partly to cut down on high-cost meat.

Crannell also believes in teaching her children the fine art of thrift shopping.

"Nigel, my 8-year-old, loves to go to yard sales with me," she said. "He can get toys for a quarter at yard sales. In fact, he's so cute that he can get things for free.

"He has more toys than he knows what to do with." E-mail to a friend

Extreme recycling: Food, furniture, diapers

(LifeWire) -- Madeline Nelson finds a bag of slightly bruised apples and day-old bread left in a supermarket's Dumpster too tempting to pass up.

Cindy Rosin rummages through discarded produce in trash bins outside a Manhattan grocery store.

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"A lot of perfectly good food is thrown away," says Nelson, a spokeswoman for Freegan.info, a New York City group that promotes "freeganism," which eschews conventional commerce in favor of a lifestyle that uses minimal resources.

Freegans try not to buy things new -- not even food.

Jumping into a garbage bin may sound scary, but Nelson, 52, who lives in Brooklyn, says it's no big deal. Humans, she says, are "hardwired to be foragers."

For the thousands who search online for free merchandise, pick up roadside castoffs and even dig through Dumpsters, paying for everything they need is yesterday's news.

At a time when many Americans are on tighter budgets and worrying about environmental conservation, the practice may get more popular.

Roadside treasures

Sometimes opportunities present themselves.

"I have picked up several free things over the years from the side of the road," says Kara May, 38, a Seattle stay-at-home mom. She recalls her acquisitions with a sense of achievement: There was the easel for her daughter; a set of like-new ceramic casserole dishes; a toy dump truck. Send us your recycling photos, videos

"I'm saving money, but I'm also reducing the amount of stuff that needs to be produced and that eventually may end up in a landfill," says May, a founding member of Going Green Family, a Seattle grassroots organization that helps families run environmentally friendly households.

New York City resident Christina Salvi, 32, agrees that curbside shopping is the way to go. "My whole apartment is furnished with discards," she says. "I find really great stuff all the time. Here in New York, it's kind of obscene how much goes into the trash."

Salvi helped launch FreeMeet, a local recycling event where people share their unwanted items. "Our goal is to have everything find a new home," she says.

Free commerce

Before hitting the mall, find out whether someone in your city is getting rid of the thing you want, says Deron Beal, 40, founder of Freecycle.org, a Web site built on the premise that "one person's trash is another's treasure."

Here's how it works: As in the "free" section of Craigslist.org, users post what they're giving or seeking, then coordinate the details. On thousands of Freecycle message boards, the dialogue looks like this: OFFERED: Two Pez dispensers. TAKEN: Krups espresso machine. WANTED: Garden hose that works. OFFERED: Adult diapers, size small.

It's an eclectic mix, but that means there's something for everyone, says Beal. He launched the nonprofit group four years ago with 20 or 30 friends. Now it has 4.5 million users, he says, with 70,000 newcomers each week helping to reduce the growth of landfills.

At the heart of Freecycle.org, Beal says, is a spirit of giving, not getting: People in South Dakota collected prom dresses for teenage girls; a 95-year-old Arizona man looks for old bikes he can fix up and give to disadvantaged children; others have joined together to find clothing and supplies for orphans in Haiti.

Beal uses the site, too, but only for giving. "My wife has made it clear that it's good for purging, not collecting," he says. "But I did get a George Foreman grill once." The people giving it away turned out to be neighbors he had never met. "When I picked up the grill, they also gave me a half dozen eggs from their chickens," he says. "It's a beautiful example of community giving."

FreeSwapper.org started last year to provide a similar service, and FreeSharing.org lists hundreds of organizations across the country with the same goals.

Dumpster diving

Curious about Dumpster diving? Freegan.info keeps a city-by-city listing of prime Dumpster locations, from bakeries to bookstores. Large chain stores in wealthy neighborhoods are particularly prone to tossing edible foods, Nelson says.

If you go, she advises, bring a friend (in case the lid closes on you) and wear gloves to protect your hands from glass and other sharp objects. Ask your local police department first whether it's OK -- some cities have criminalized Dumpster diving. Don't salvage things that need to be refrigerated or show traces of mold, and thoroughly wash any food you've taken from a Dumpster before consuming. It's also a good idea to conduct a smell test of any food you may take; if it smells bad, it probably is spoiled and should be avoided.

Nelson says freeganism has nothing to do with income. She says many divers, herself included, have at least moderate incomes: "It's really about boycotting the consumerist system."

But not everything can be found in a Dumpster. Nelson admits that some things must be acquired the old-fashioned way: at the store. Like cooking oil -- "You can never find enough of that." E-mail to a friend