From Reality Sandwich
Reality Sandwich is facing financial difficulties that threaten its continued publication. That's not because of dull content, nor failure to connect with an audience. On the contrary: it's an edgy, relevant, and provocative publication with some very talented (ahem!) writers, but what it doesn't have is what they call a "monetization" scheme. And in this, it is not alone.
How to monetize digital content? This is a question facing everyone from Rupert Murdoch, the record labels, and the movie studios, all the way down to Reality Sandwich and the lone blogger. You see, fundamentally the marginal cost of production for digital content is near zero, which drives the price toward zero as well. Fixed costs may be quite high, but once those are paid it doesn't cost much more to serve a million readers than it does a hundred.
Like most websites, Reality Sandwich offers its content for free. How, then, to meet operating expenses? Various possible solutions include charging for access (remember Encarta?), walling off special "premium" content, relying on advertising, associating real-world pay services with on-line content, and asking for donations. I think that, with the exception of certain niche applications, only the last of these has any real future.
What I am saying here is that the only business model that makes sense for most digital content is the model of the gift: to offer it as a gift, and to receive gifts in turn.
Primitive economies were wholly gift economies, which was natural when each consumer was also a producer. Today, the dominant model for profit-making business is to control scarce resources and sell their produce, or the resources themselves, to people who need them. The earliest example of this was the control of land. In early times, when land was not the subject of property, it was very difficult for one person to become significantly richer than another, simply because the source of all wealth was equally available to all. Unable to compel the labor of others, our primary means of economic circulation was the gift.
When, as in Roman times, land ownership concentrated in the hands of the few, the many were cut off from the once-abundant source of all wealth, the land. The conventions of property made land artificially scarce, and the landless had to sell their labor and surrender their freedom just to survive.
Since then, scarce resources have, one after another, fallen under private control, while many resources that were once abundant have been made scarce. It is hard to make someone pay for something that they can easily procure themselves. The quintessential example is water, perhaps the most abundant substance on the planet, but made scarce today through our our separation from nature and the pollution and chemical treatment of the water supply. As a result, bottled water has been the number one beverage growth category over the last two decades.
Water is inherently abundant because of its inexorable tendency to recycle, to flow downhill and return to its source. The same dynamics apply to another resource equally vital to the human species: information, by which I mean the sum of human invention, culture, story, and art. Drawing from the reservoir of the ideas that surround us from birth, we fashion yet new creations which flow back into that reservoir to enrich it still further. Yet the media has found a way to bottle it up and sell it back to us.
The question, in the Age of Money, has been how to profit from something abundant, because that which is abundant falls naturally into the realm of gift. In the modern era, it has been possible to profit from the control of information because the means of its gathering and dissemination required significant capital. To run a newspaper or record company required a vast coordination of labor. To mass-produce vinyl records or newspapers required an investment beyond the reach of most people, allowing producers to maintain scarcity. They were aided by copyright laws that prevented unauthorized replication, which would have compromised that scarcity. But today the inherent abundance of information is reasserting itself.
With the Internet today, we again have a situation in which the source of (at least a certain kind of) wealth is equally available to all, and again in which the distinction between producer and consumer blurs. Less and less is it possible to compel people to pay for music, for news, for software, and for many other items of cultural wealth. Websites that charge for access go the way of Encarta, and I think that recent plans by Rupert Murdoch and The New York Times to put their content behind pay walls will prove just as disastrous. If you are trolling the web and hit a pay wall, you will probably just go somewhere else to find similar content for free. Why should I pay to read the NYT, when I can get more-or-less equivalent news for free elsewhere? Can the NYT compete with the entire Web? And why should I pay for Microsoft Office when I can use OpenOffice software, which is just as good, for free?
When something is freely available at zero cost, it is impossible to charge money for it. That is why music, software, publishing, and film companies have lobbied so hard for intellectual property protections and digital rights management technologies. They are essentially trying to impose artificial scarcity on something that is fundamentally abundant. It has worked, to some extent, but as the total amount of free digital content expands, the pay world becomes less and less important and necessary. You can get your news, your intellectual stimulation, your software, and your entertainment elsewhere.
The financial problems faced by Reality Sandwich are thus nearly universal. With the exception of highly specialized research firms, charging for digital content doesn't work, nor does charging for certain "premium" content as Reality Sandwich tried to do with its Backstage feature. Five minutes of a particular video would be freely available, but if you wanted to see the whole thing you'd have to pay for Backstage. The problem was that, although the content was quite good, there is plenty of other great content for free elsewhere. Moreover, this approach essentially boils down to, "I could give you this at virtually no cost to myself, but I'm withholding it until you pay me," It feels like extortion, and I think I am not the only one turned off by it. I suspect that the people in charge of the site were turned off by it too, but proceeded out of a feeling of necessity. They need to meet their operating expenses somehow! Fortunately, it now appears that Reality Sandwich is abandoning this idea and moving more fully toward a gift paradigm.
The third approach I mentioned, advertising, is also subject to severe limitations. The first limitation is the ability of the scarce-goods economy to support advertising. The second is that the Internet's ability to foster peer-to-peer connections is eroding the value of advertising, along with all other forms of intermediation. Just as the Internet has decimated the professions of stockbroker and travel agent, Craigslist has, according to one estimate, destroyed $100 billion of classified ad revenue over the last ten years. And whereas once producers needed advertising to make consumers aware of their products, we can now find them ourselves with an Internet search. Finally, our capacity to take in advertising has nearly been saturated. When nearly every blank surface and empty moment, whether on a bus, in a theater, or at a sporting event, is filled with advertising, we become inured to it, and the effectiveness of all advertising suffers from diminishing marginal utility. Don't get me wrong -- I am not proclaiming the demise of advertising (I am an optimistic person, but even my optimism knows limits!). I am suggesting, rather, the advent of Peak Advertising, and a long, slow decline to follow. The parallel with Peak Oil is nearly exact: in both cases, a vast commons -- in this case, the commons of our collective attention -- has been exhausted. In any event, when even YouTube with its tens of millions of daily users is unable to break even with ad sales, the prospects for Reality Sandwich in that regard are dim indeed.
A fourth approach is to piggyback value-added services onto free content. This is what bands are doing when they give away music in hopes of increasing concert ticket sales. Software companies do the same when they give away software and charge for technical support or consulting. Reality Sandwich does this by offering teleseminars and retreats. While this is a valid strategy, I think in the case of Reality Sandwich the value lies more in its synergy with the site's mission and purpose than with any financial contribution, since it is hard to make significant amounts of money from such events. Moreover, teleseminars, online classes, and so forth suffer from the same dilemma of making people pay for something that has a zero marginal cost. Unless there is one-on-one interaction happening, it doesn't matter how many people are listening. It is a broadcast model, and the production cost is the same whether one person or a hundred are listening.
That leaves voluntary donations -- the model of the gift -- which I believe is the only model for digital content that is viable in the long run. Reality Sandwich is moving in that direction with the pay-what-you-like subscription to the Evolver Social Movement. The gift model is quite natural for digital content. In the age of paper, vinyl, and other physical media that demanded physical distribution and incurred significant unit costs, it was both possible and to some extent justifiable to charge money for cultural creations. But today, the medium has nearly dematerialized, and the unit cost to deliver digital content has dropped to nearly zero. This dematerialization means that no depletion is incurred by giving something away. No matter how many copies of my book or recordings people download from my website, my store of them is not depleted thereby. Supply is infinite; therefore, according to the law of supply and demand, the natural price point is zero.
What, then, shall induce me to produce such content in the first place? It is the same thing that motivates Reality Sandwich's creators and the creators of innumerable other websites that are contributing to the Great Turning that is underway today. It is the desire to give of our gifts in order to create a more beautiful world. While this website's creators may have had notions of launching a successful media enterprise, and may have incorporated those notions into various business plans to seek investment, I think their true motivation was that they wanted to give something new and important to the world. Such is the motivation of any true artist, and when a person betrays his art and subordinates it to the goal of pecuniary gain, the result is an obvious sellout. It is time for this website's creators to fully embrace the gift paradigm, for it is aligned with the true spirit behind what they have created. Part of this embrace would be to release all of the Backstage content to all readers. Another part would be, in addressing investors, to say, "The purpose of this enterprise is to contribute to the evolution of the human species. You will receive no financial return on your investment, but we promise to treat your contribution as sacred."
I have found that the more I step into the spirit of the gift, the more the world responds in kind. When we witness true generosity -- giving without any agenda except that the gift be received -- we are moved to generosity ourselves, and when we are the recipient of a gift we are moved to gratitude. Accordingly, as the producers of this website step more fully into owning and enacting their true motives, its readers will step in to support it. All of us desire to contribute to what I call "the more beautiful world our hearts tell us is possible." So, I would like invite this website's readers to respond in kind to Reality Sandwich's embrace of gift principles. I would very much like to be part of an explicitly "gift-based media enterprise". While it costs a lot of money to produce this website, your particular copy costs nearly nothing. There is thus no justification to make you pay. But if you feel grateful for what is provided here, then act on that gratitude and give.
Like many artists, I feel uncomfortable selling my work, because any amount I charge seems at once too much and too little: too much, because it is sacred to me and I desire to give it without condition; too little because to put a price on the sacred devalues it, turning the infinite into something finite. Many of us prefer to offer our work as a gift, and that means contributing to publications that operate on gift principles themselves (if their main goal is profit, then we feel taken advantage of). Reality Sandwich is a website in which the spirit of the gift is blossoming. It is about launching (or, to be more modest, helping to accelerate) a social movement. They call it the "Evolver social movement," but of course it extends far beyond this site. Ken, Daniel, Jonathan et al have merely named it, yet names can be a powerful way to crystallize attention, to bring what was unconscious into consciousness.
Part of the shift in human consciousness that is underway today is a transition to a different kind of economy, an economy that applies the principles of the gift to a modern technological environment. I am writing a book, Sacred Economics, to create a vision and a vocabulary to speed this transition. Yet writing about economics, I feel totally at home at a website that also includes articles on ayahuasca, crop circles, the prison system, dream psychology, and so on. To me the link is clear: all of these topics are like gift mentality in contributing to a reversal of the ideology of Separation, and the corresponding sense-of-self that has increasingly dominated our civilization for thousands of years. For the discrete-and-separate self, inhabiting an objective universe, more for you is less for me. This is the self of usury. In a gift society, that maxim is no longer true; instead, more for you is more for me, because I know that if you have more than you need, you will give the surplus to someone who needs it. In this very simple way, we become connected; I wish for your good as you wish for mine, and do unto you as I would have you do unto me. Foretold thousands of years ago, the Golden Rule is the truth of the coming age.
Today we are transitioning into a time that realizes the truth of the connected self, in which not only my well-being, but my very existence, my very being-ness, depends on the well-being and indeed the existence of all other beings on the planet. I am merely describing the economic dimension of the truth of interbeingness. That same truth is also what moves us to compassion for prisoners; it can be experienced directly in psychedelic states; it manifests in the eerie connections between the crop circles and our own minds. To move fully to a gift model would bring the form of this website into alignment with its content.
The common thread that ties this website together is the feeling that we are awakening to a much more wonderful world, something magical, something mind-blowing. We want our minds to be blown because we are done with the Age of Separation and the small, isolated self that inhabits it. It is time for this social movement to begin in earnest.
Let us hope and hold for this website that it let go of any residual, unconscious motivations of profiting from the readers, which is the old media model, and open up fully to the spirit of the gift. It is happening -- it must happen, for there is really no other way. And let us hope and hold that its readers respond in kind, with generosity and forgiveness, and take Reality Sandwich another step forward as a cocreated, gift-based catalyst for the evolution of human beingness.