I’ve been fascinated by the Because Effect, ever since Doc Searls first discussed it with me, set against the backdrop of Doc’s Making a New World and Stewart Brand’s The Long Now. What is this Because Effect? Doc describes it better than I can, but if it helps you any, I use the following definition:
When something that was originally scarce starts becoming abundant, something strange happens. You find that you start making money because of that thing rather than with that thing. That’s the Because Effect.
Prince has often struck me as an incredibly talented artist as well as someone who really understands trends. So it was with some amusement that I read this story, where he is described as having done a deal with the Mail On Sunday to give his latest album away free before it hits the shops.
Now that’s avant-garde. Don’t just give a track or two away, give the whole thing away before you put it on sale. I know, I know, you’re going to say “he should have made it a free download” or something like that; or rather, the Mail On Sunday should have done a deal whereby anyone who signed up to their free online edition had the right to download it for free or something like that.
Whatever. The point is that Prince understands how he makes money, what’s scarce and what’s abundant about it. Digital downloads are abundant. Concert appearances are scarce. He makes money because of his CDs and not with them.
A word of caution. Some people are just not comfortable with abundance economics, so they try to create artificial scarcities as they go along. Second nature to them, I guess. So please don’t be surprised to find that someone dreams up a scheme whereby concert tickets start being offered as triple plays at grossly inflated prices, bundling together the concert with the CD and the T-shirt. [In this context, there's a lot of noise about artists being offered "360-degree" contracts by media companies, this is a dangerous trend.]
You cannot bundle abundance with scarcity, it’s like trying to implement region coding of the air that you breathe. But then some people will try anything.