Free Riding Isn't A Bug, It's A Feature (original) (raw)

from the ditching-the-myth dept

Whenever we write about various business models around here that involve using free infinite goods to get people to buy some kind of scarce good, we always get some people who self-righteously exclaim that if they got content for free, they would never, ever buy those scarce goods, and somehow this disproves the model. This is similar to the common refrain that all of the “free riders” would destroy any such business model, to which I usually ask whether or not all those “free riders” who watched a BMW commercial and didn’t buy a BMW somehow destroyed BMW’s business.

In response to a similar question, concerning all of the “free riders” on Wikipedia, Tim Lee has done a fantastic job explaining why the whole concept of the “free rider” problem is a myth in most of these scenarios. In the case of Wikipedia, for example, all of those “free riders” who don’t contribute are actually what makes it worthwhile for the smaller group of contributors to take part. Those “free riders” aren’t a negative: they’re the audience. If you set up the model right, then any free rider actually becomes a part of the solution, not the problem. The more “free riders” on Wikipedia, the more people want to contribute. The more “free riders” who listen to a band, the more other people want to hear it — and the more some of those people will be willing to pay for scarce goods to associate themselves with that band. In other words, if you set up your model correctly, free riding isn’t a bug, it’s a feature that helps drive your model forward.

Filed Under: crowds, free-riding, value