Thursday, July 16, 2009

Required Reading

In just under 3000 words, Malcom Gladwell takes apart Wired editor Chris Anderson's Free: The Future of a Radical Price, lays the pieces out on the floor for examination, then sweeps them up and tosses them in the nearest dustbin. If I ever write such a pithy and devastating critique, of anything, I hope I may have the wisdom to quit while I'm ahead.

Along the way he articulates one of the major reasons that disruptive technology can end up being not-so-disruptive technology:

Anderson begins the second part of his book by quoting Lewis Strauss, the former head of the Atomic Energy Commission, who famously predicted in the mid-nineteen-fifties that “our children will enjoy in their homes electrical energy too cheap to meter.”

“What if Strauss had been right?” Anderson wonders, and then diligently sorts through the implications: as much fresh water as you could want, no reliance on fossil fuels, no global warming, abundant agricultural production. Anderson wants to take “too cheap to meter” seriously, because he believes that we are on the cusp of our own “too cheap to meter” revolution with computer processing, storage, and bandwidth. But here is the second and broader problem with Anderson’s argument: he is asking the wrong question. It is pointless to wonder what would have happened if Strauss’s prediction had come true while rushing past the reasons that it could not have come true.

And why isn't electricity too cheap to meter?
As Gordon Dean, Strauss’s predecessor at the A.E.C., wrote, “Even if coal were mined and distributed free to electric generating plants today, the reduction in your monthly electricity bill would amount to but twenty per cent, so great is the cost of the plant itself and the distribution system.”
Indeed. It's easy -- human nature, probably -- to get so caught up in a particular technical advance as to forget that said advance is only part of the picture and that, rather than falling like dominoes, the other pieces of the system are more likely to shift slightly and go on doing more or less what they ever did.

I have only two quibbles with the piece.

The article quotes the Credit Suisse analysis I mentioned putting YouTube's annual loss at around $470 million. As I said, the actual figure might be closer to $170 million, but I don't think the distinction is that significant to the overall argument.

More disappointing is the last sentence:
The only iron law here is the one too obvious to write a book about, which is that the digital age has so transformed the ways in which things are made and sold that there are no iron laws.
As far as I can tell, there are no more or fewer iron laws of business and economics than there were fifty years ago. On the tail of a convincing argument that digital technology isn't going to change the cold fact that people have to and are willing to pay money for things of value, it's strange to see an assertion that it has completely changed the game after all.

But no matter. It's a great review.

Free: ... is available in print for $26.99.

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