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Around B. It was not the obvious bug that yr w d ou or I might have spotted, which is that their system was sexagesimal, or based on powers of sixties instead of tens.
As awkward as that is, as long as you don't expect to count with your fingers and toes, it's easy enough to figure out it is, after all, the root of our own time system. No, the problem was something else: how to write down numbers. Unlike most other cultures of that era, the Babylonians didn't have a different symbol for every number within their base set.
Instead, they used just two marks: a wedge that represented 1 and a double wedge that represented So, depending on where it was placed, a single wedge could represent 1; 60; 3,; or an even greater multiple of sixty. Adding numbers with that clever device is simply a matter of moving stones up and down, with stones in different columns representing different values.
If you have abacuses with sixty stones in each column, a numbering system based on powers of sixty is no harder than one based on tens. But when you want to mark a number on an abacus, what do you do if there are no stones in a column? The number 60 is one wedge in the sixties column and no wedges in the ones column. How do you write "no wedges"?
The Babylonians needed a placeholder that represented nothing. They had to, in effect, invent zero. And so they created a new character, with no value, to signify an empty column.
They denoted it with two slanted wedges. Given the obvious need for such a placeholder when you're writing down numbers based on powers of any base, you might think that zero had been with us since the dawn of written history. But plenty of advanced civilizations managed to come and go with no need for it. The Romans had no use for it in Roman numerals. There are no fixed columns in that notation. Instead, the value of any digit is determined by the other digits around it. The Greeks, meanwhile, explicitly rejected zero.
Since their mathematical system was based on geometry, numbers had to represent space of one sort or another — length, angles, area, etc. Zero space didn't make sense. Greek math was epitomized by Pythagoras and his Pythagorean cult, which made such profound discoveries as the musical scale and the golden ratio but not, ironically, the Pythagorean Theorem — the formula for calculating the hypotenuse of a right triangle had actually been known for many years before Pythagoras.
Although they understood that arithmetic sometimes produces negative numbers, irrational numbers, and even zero, the Greeks rejected all of them because they could not be represented in physical shapes. Awkwardly, the golden ratio is itself an irrational number, which was kept secret as long as possible. Such myopia is understandable. Where numbers only represent real things, you don't need a number to express the absence of something.
It is an abstract concept and only shows up when the math gets equally abstract. It is in a way the most civilized of all the cardinal [numbers], and its use is only forced on us by the needs of cultivated modes of thought. Unlike the Greeks, Seife notes, the Indians did not see shaxpln not see pes in all numbers.
Instead the Indians saw numbers as concepts. Eastern mysticism embraced both the tangible and the intangible, through the yin and yang of duality.
The god Shiva was both the creator and the destroyer of worlds; indeed, one aspect of the deity Nishkala Shiva was the Shiva "without parts" — the void. Through their ability to divorce numerals from physical reality, the Indians invented algebra.
That, in turn, allowed them to extend mathematics to its logical ends, including negative numbers and, by the ninth century, zero. Indeed, the very word "zero" has Indian origins: The Indian word for zero was sunya, meaning "empty," which the Arabs turned into sifr. Western scholars Latinized this into zephirus, the root of our zero. But what about an economic system? Well, in a sense that had been there all along. The word "economics" comes from the Ancient Greek oikos "house" and nomos "custom" or "law" , therefore "rules of the house hold.
Even after most cultures established monetary economies, day-to-day transactions within close-knit social groups, from families to tribes, was still mostly without price. The currencies of generosity, trust, goodwill, reputation, and equitable exchange still dominate the goods and services of the family, the neighborhood, and even within the workplace.
In general, no cash is required among friends. But for transactions between strangers, where social bonds are not the primary scoring system, money provided a common agreed-upon metric of value, and barter gave way to payment. But even then there was a place for free, in everything from patronage to civil services. As the nation-state emerged in the seventeenth century, so did the notion of progressive taxation, by which the rich gave more so the poor could pay less and receive services for free.
This establishment of government institutions to serve the people created a special kind of Free: You may not pay for government services yourself, but society at large does, and you may never know exactly which of your own tax dollars come back to you directly.
Charity, of course, is also a form of free, as is communal giving, such as barn raisings and potlatches, Native American gift festivals. The emergence of the five-day workweek, labor laws that established minimum and maximum work ages, and the shift from field labor to industrial and then white-collar work created free time.
That, in turn, created a boom in volunteerism free labor that continues today. Even as monetary economies became the norm, the importance of not charging for some things was still deeply held. Perhaps the best example is interest on a loan, which has historically been seen as a bit of an exploitation, especially when it comes to the poor. Today, "usury" means excessive interest, but it originally meant any interest whatsoever.
An interest-free loan is now seen as a form of gift. The early Catholic Church, for instance, took a strong stand against charging for loans, and Pope Clement V made the belief in the right to usury heresy in Not all societies saw interest as evil. The historian Paul Johnson notes: Most early religious systems in the ancient NearThifiancient N East, and the secular codes arising from them, did not forbid usury.
These societies regarded inanimate matter as alive, like plants, animals and people, and capable of reproducing itself. Hence if you lent "food money," or monetary tokens of any kind, it was legitimate to charge interest. Food money in the shape of olives, dates, seeds or animals was lent out as early as c. Some interpretations of Islamic law ban interest entirely, and the Koran minces no words on the subject: Those who charge usury are in the same position as those controlled by the devil's influence.
This is because they claim that usury is the same as commerce. However, God permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with God. As for those who persist in usury, they incur Hell, wherein they abide forever.
Eventually economic pragmatism made interest acceptable and the Church came around, in part to appease the merchant classes to gain political support. In the sixteenth century, notes the Wikipedia entry on usury, short-term interest rates dropped dramatically from 20 to 30 percent annually to 9 to 10 percent , thanks to more efficient banking systems and commercial techniques, along with more money in circulation.
The lower rates greatly diminished the religious opposition to usury. Money supplies were regulated, currencies were protected, and economies as we now know them flourished. More and more trade happened between strangers thanks to the principles of comparative advantage and specialization. People made what they could make best and traded for other goods with people who could make them better.
Currencies became more important as the units of value because their worth came from trust in the overarching issuing authority usually the state , rather than either of the parties in the transaction. The notion that "everything has its price" is just a few centuries old. Thanks to Adam Smith, commerce became not just a place to shop but a way of thinking about all human activity.
The social science of economics was born as a way to study why people make the choices they do. Just as in Darwin's description of nature, competition was at the heart of this emerging science of commerce. Money was how we kept score.
Charging for things was simply the most efficient way to ensure that they would continue to be produced — the profit motive is as strong in economics as the "selfish gene" is in nature.
But amid the market triumphalism, there remained pockets of people who resisted money as the mediator of all exchange. Karl Marx advocated collective ownership and allocation according to need, not ability to pay.
And the anarchist thinkers of the nineteenth century, such as the Russian prince-turned-radical Peter Kropotkin, imagined collectivist Utopias where members "would spontaneously perform all necessary labor because they would recognize the benefits of communal enterprise and mutual aid," as the Wikipedia entry on Anarchist Communism puts it. Spelling this out in his book, Mutual Aid: A Factor of Evolution, Kropotkin, in a way, anticipated some of the social forces that dominate the "link economy" of the Internet today people linking to one another in their posts, bringing traffic and reputation to the recipient.
In giving something away, he argued, the trade-off is not money, but satisfaction. This satisfaction was rooted in community, mutual aid, and support. The self -reinforcing qualities of that aid would, in turn, prompt others to give equally to you. But every effort to make this work in practice at any scale failed, largely because the social bonds that police such mutual aid tend to fray when the size of the group exceeds termed the "Dunbar number" — the empirically observed limit at which the members of a human community can maintain strong links with one another.
Of course, this pretty much doomed collectivism for any group as large as a country. It would take the arrival of virtual worlds for us to finally see larger economies built on mutual benefit actually work. Online societies from the Web to online multiplayer games can allow us to maintain social networks that are much larger than those we maintain in the physical world.
Software extends our reach and keeps score. Market economies were firmly established throughout the West. Far from the root of all evil, money was proving to be a catalyst of growth and the key to prosperity. The value of anything was best determined by the price people would pay for it — it was as simple as that. Utopian dreams of alternative systems based on gifts, barter, or social obligation were reserved for fringe experiments, from communes to Israel's kibbutzim.
In the world of commerce, "free" took on its primary modern meaning: a marketing tool. And as such, it quickly became regarded with mistrust.
By the time King Gillette and Pearle Wait made their fortunes from free, consumers were used to hearing "there's no such thing as a free lunch. Ranging from a sandwich to a multicourse meal, these free lunches were typically worth far more than the price of a single drink.
However, the saloon-keepers were betting that most customers would buy more than one drink, and that the allure of free food would attract patrons during a less busy time of day. The Wikipedia entry on free Lunch is a fascinating glimpse into the history of this storied tradition. In , it recounts, the New York Times reported that free lunches had emerged as a "peculiar" trend common in New Orleans, where a free meal could be found in every saloon, every day.
According to this report, the free -lunch custom was feeding thousands of men who were subsisting "entirely on meals this way.
All classes of the people can be seen partaking of these free meals and pushing and scrambling to be helped a second time. In San Francisco the custom arrived with the Gold Rush and stayed for years. But elsewhere, the free lunch ran afoul of the temperance movement. An history of the battle to ban alcohol, also cited in the Wikipedia entry, concluded that the free lunch — along with women and song — was nothing but a way to disguise a well-filled bar.
The alcohol was the "centre about which all these other things are made to revolve. In , Reformer William T. Stead claimed the free-lunch saloons "fed more hungry people in Chicago than all the other agencies, religious, charitable, and municipal, put together. With the rise of brands, advertising, and national distribution, free became a sales gimmick. There's nothing new about free samples, but the mass marketing of them is credited to a nineteenth-century marketing genius named Benjamin Babbitt.
Among Babbitt's many inventions were several methods for making soap. But where he really shined was in his innovative selling, which rivaled even that of his friend P.
Babbitt's Soap became nationally famous due to his advertising and promotional campaigns, which included the first widespread distribution of free samples.
Another pioneering example is Wall Drug in South Dakota. In , Ted Hustead, a Nebraska native and pharmacist, was looking to establish his business in a small town with a Catholic church. He found exactly what he wanted with Wall Drug. It was located in a -person town in what he referred to as "the middle of nowhere. But in , Mount Rushmore opened sixty miles to the west, and Hustead's wife, Dorothy, got the idea to advertise free ice water to parched travelers heading to see the monument.
The tactic put Wall Drug on the map, and business boomed. It now offers free bumper stickers and free promotional signs, along with 5 -cent coffee. Ice water, of course, is still free. Today, we know that the most disruptive way to enter a market is to vaporize the economics of existing business models.
Charge nothing for a product that the incumbents depend on for their profits. The world will beat a path to your door and you can then sell them something else. Just look at free long-distance calling with mobile phones, which decimated the fixed line long-distance business, or think of what free classifieds do to newspapers. Seventy years ago, a similar battle played out over recorded music. In the late s, radio was emerging as a popular entertainment format, but also one that made a mess of the old ways of paying musicians.
Had those millions been packed into one concert hall, the musicians' share of the receipts would presumably have been huge. Broadcasters argued that it was impossible to pay licensing fees based on how many listeners tuned in, because no one knew what that number was. Worse, it threatened to raise that rate when the contract expired in As the broadcasters and ASCAP were negotiating, radio stations started taking matters into their own hands, and cut the live performances out entirely.
Recording technology was improving, and more and more stations began playing records, which were introduced by a studio announcer known as a disk jockey. Faced with a shrinking pool of music to play and a potentially ruinous royalty requirement, the broadcasters struck back by organizing their own royalty agency, Broadcast Music Incorporated BMI.
The upstart BMI, according to the American Decades account, "quickly became a magnet for regional musicians, such as rhythm and blues or country and western artists, who were traditionally neglected by the New York-based ASCAP.
The business model of charging radio stations a fortune for the right to play music collapsed. Instead, radio was recognized as a prime marketing channel for artists, who would make their money from selling records and concerts. Although ASCAP challenged this in several lawsuits in the s and s, it never regained the power to charge high royalties to radio stations, free-to-air radio plus nominal royalties for artists created the disk jockey era and, in turn, the Top 40 phenomenon.
Today these royalties are calculated based on a formula involving time, reach, and type of station, but are low enough for radio stations to prosper. The irony was complete. Rather than undermining the music business, as ASCAP had feared, free helped the music industry grow huge and profitable.
A free inferior version of the music lower quality, unpredictable availability turned out to be great marketing for a paid superior version, and the artists' revenues shifted from performance to record royalties.
Now free offers the opportunity to switch back again, as free music serves as marketing for the growing concert business. The one constant, predictably, is that the labels are still against it. For most previous generations, scarcity — of food, of clothing, or of shelter — was a constant concern. For those born in the developed world in the past half century or so, however, abundance has been the keynote. And nowhere has that abundancelawnat abunda been more apparent than in that fundamental prerequisite for life: food.
When I was a kid, hunger was one of the main problems of poverty in America. Today, it's obesity. Something dramatic has changed in the world of agriculture in the past four decades — we got much better at growing food.
A technology -driven revolution turned a scarce commodity into an abundant one. And in that story lie clues to what can happen when any major resource shifts from scarcity to abundance. There are only five major inputs to a crop: sun, air, water, land nutrients , and labor. Sun and air are free, and if the crop is grown in an area with plenty of rainfall, water can be free, too. The remaining inputs — primarily labor, land, and fertilizer — are very much not free, and they account for most of the price of crops.
In the nineteenth century, the Industrial Revolution mechanized agriculture, radically lowering the cost of labor and increasing crop yield. But it was the "Green Revolution" of the s that really transformed the economics of food by making farming so efficient that fewer people had to do it anymore.
The secret of this second revolution was chemistry. For most of human history manure has determined how much food we had. Agricultural yield was limited by the availability of fertilizer, and that largely came from animal and sometimes human waste.
If a farm wanted to support both animals and crops in a synergistic nutrient cycle, it had to split its land between them. But at the end of the nineteenth century, naturalists began to understand what it was in manure that plants need: nitrogen, phosphorous, and potassium. At the beginning of the twentieth century, a few chemists started work on making those elements synthetically.
The breakthrough came when Fritz Haber, working for BASF, figured out how to extract nitrogen from the air in the form of ammonia by combining air with natural gas under high pressure and heat.
Commercialized by Carl Bosch in , cheap nitrogenous fertilizer hugely increased agricultural productivity and helped avert the long-predicted "Malthusian catastrophe," or population crisis. Today, production of ammonia currently constitutes about 5 percent of global natural gas consumption, accounting for around 2 percent of world energy production. The Haber-Bosch Process eliminated farmers' dependency on manure.
Along with chemical pesticides and herbicides, this created the Green Revolution, which increased agricultural capacity worldwide nearly a hundredfold, allowing the planet to feed a growing population, especially a new middle class that, desiring to eat higher on the food chain, increasingly chose resource-intensive meat rather than just grains.
The effects of this have been dramatic. The cost of feeding ourselves has dropped from one -third of the average U. This extraordinary grass, bred by man over millennia to have larger and larger starch- filled kernels, produces more food per acre than any other plant on the Earth. Corn economies are naturally abundant economies, at least as far as food goes. Historians often look at the great civilizations of the ancient world through the lens of three grains: rice, wheat, and corn.
Rice is protein-rich but extremely hard to grow. Wheat is easy to grow but rrento grow bprotein-poor. Only corn is both easy to grow and plump with protein.
The higher that ratio, the more "social surplus" the people eating that grain had, since they could feed themselves with less work. The effect of this was not always positive. Rice and wheat societies tended to be agrarian, inwardly focused cultures, presumably because the process of raising the crops took so much of their energy.
But corn cultures — the Mayans, the Aztecs — had spare time and energy, which they often used to attack their neighbors. By this analysis, corn's abundance made the Aztecs warlike. Today, we use corn for more than just food. Between synthetic fertilizer and breeding techniques that make corn the most efficient converter of sunlight and water to starch the world has ever seen, we are now swimming in a golden harvest of plenty — far more than we can eat. So corn has become an industrial feedstock for products of all sorts, from paint to packaging.
Cheap corn has driven out many other foods from our diet and converted natural grass-eating animals, such as cows, into corn-processing machines. As Michael Pollan points out in The Ominivore 's Dilemma, a chicken nugget "piles corn upon corn: what chicken it contains consists of corn [its feed], but so do the nugget's other constituents, including the modified corn starch that glues the thing together, the corn flour in the batter and the corn oil in which it is fried.
Much less obviously, the leavenings and the lecithin, the mono-, di-and triglycerides, the attractive golden color and even the citric acid that keeps the nugget fresh can all be derived from corn. And that goes for the nonfood items, too! From toothpaste and cosmetics to disposable diapers and cleansers, everything contains corn, even the cardboard they're boxed in. Even the supermarket itself, with its wallboard and joint compound, linoleum and adhesives, is built on corn.
Corn is so plentiful that we now use it to make fuel for our cars, in the form of ethanol, which has finally tested its abundance limits. After decades of price declines, corn has in recent years started getting more expensive along with oil prices.
But innovation abhors a rising commodity, so that rising price has simply accelerated the search for a way to make ethanol out of switchgrass or other forms of cellulose, which can be grown where corn cannot. Once that magic cellulose-eating enzyme is found, corn will get cheap again, and with it, food of all sorts. Food is at least replenishable, but minerals are not.
After all, the Earth is a limited resource, and the more ore we take out of it the less there remains, which is a classic case of scarcity. In , a think tank called the Club of Rome published a book called Limits to Growth, which predicted that the effect of a rapidly growing world population running up against finite resources would be catastrophic. It went on to sell 30 million copies and defined the environmental movement, including the dangers of the "population bomb" that was putting a higher burden on our planet than it could conceivably take.
But not everyone agreed with this Malthusian despair. This has the effect of increasing supply faster than demand, which in turn depresses prices.
Obviously this can't go on forever, since those resources are ultimately limited, but the point was that they are a lot less limited than the Club of Rome thought.
The debate surrounding the veracity of this statement turned into one of the most famous bets in history, one that would essentially define the opposing views of scarcity versus abundance thinking.
In September , Paul Ehrlich, a population biologist, and Julian Simon, an economist, made a wager, publicly recorded in the pages of Social Science Quarterly, over the future price of some core commodities.
If the inflation- adjusted prices of various metals rose over that period, Simon would pay Ehrlich the combined difference; if the prices fell, Ehrlich would pay Simon. Ehrlich chose five metals: copper, chrome, nickel, tin, and tungsten.
Wired' s Ed Regis reported on the results: "Between and , the world's population grew by more than million, the largest increase in one decade in all of history. But by September , without a single exception, the price of each of Ehrlich' s selected metals had fallen, and in some cases had dropped through the floor.
Partly because he was a good economist and understood the substitution effect: If a resource becomes too scarce and expensive, it provides an incentive to look for an abundant replacement, which shifts demand away from the scarce resource witness the current race to find replacements for oil. Simon believed — rightly so — that human ingenuity and the learning curve of science and technology would tend to create new resources faster than we used them.
He also won because Ehrlich was simply too pessimistic. Ehrlich had predicted famines of "unbelievable proportions" occurring by , with hundreds of millions of people starving to death in the s and s, which would signify that the world was "entering a genuine age of scarcity.
Just as we've evolved to overreact to threats and danger, one of our survival tactics is to focus on the risk that supplies are going to run out. Abundance, from an evolutionary perspective, resolves itself, while scarcity needs to be fought over. The result is that despite Simon's victory, the world seemed to assume that Ehrlich, on some level, was still right.
As Regis noted, "Simon complained that, for some reason he could never comprehend, people were inclined to believe the very worst about anything and everything; they were immune to contrary evidence just as if they'd been medically vaccinated against the force of fact. Meanwhile Simon's own observations seem to be of interest only to commodities traders. But our tendency to give scarcity more attention than abundance has caused us to ignore the many examples of abundance that have arisen in our own lifetime, like corn, for starters.
The problem is that once something becomes abundant, we tend to ignore it, just like we ignore the air that we breathe.
There is a reason why economics is defined as the science of "choice under scarcity": In abundance you don't have to make choices, which means that you don't have to think about it at all. You can see this in examples small and large. The late University of Colorado engineering professor Petr Beckmann noted that "In some landlocked parts of Europe during the Middle Ages salt was at times so scarce that it was used as a 'currency' like gold. Just look at it now: It's a condiment included free with any meal — too cheap to meter.
Today basic necessities such as clothing can be made so cheaply as to be essentially disposable. As a result, the average American consumer had just eight outfits. There is no need for anyone to dress in rags today; indeed some homeless have easier access to free clothing than they do to showers and washing machines, so they simply treat clothing as a disposable item, to be worn for a short while and then discarded.
But perhaps the most familiar example of abundance in the twentieth century was plastic, which made atoms almost as costless and malleable as bits. What plastic, the ultimately fungible commodity, could do was to reduce manufacturing and material costs to practically nothing. It didn't need to be carved, machined, painted, cast, or stamped.
It was simply molded in any shape, texture, or color desired. The result was the birth of disposable culture. The concept King Gillette introduced with the razor blade was extended to nearly everything else by Leo Baekeland, who created the first all-synthetic polymer in His name gave us Bakelite. The company's logo was the letter B above the mathematical symbol for infinity, hinting at the polymer's seemingly endless applications.
After the war, all this capacity, redirected to the consumer market, turned a remarkably malleable material into an exceedingly cheap one.
But the second generation of plastics, the vinyls and polystyrenes, were so cheap that they could be tossed out without a thought. In the s, brightly colored disposable goods represented modernity, the triumph of industrial technology over material scarcity. Throwing away manufactured goods was not wasteful; it was the privilege of an advanced civilization. After the s, attitudes toward this superabundance began to change.
The environmental cost of a disposable consumer culture became more obvious. Plastic may have seemed close to free, but that's only because we weren't pricing it properly. Include the environmental costs — the "negative externalities" — and maybe it doesn't feel as right to toss out that McDonald's Happy Meal toy after one play. A generation started recycling. Our attitudes toward abundant resources moved from personal psychology "it's free to me" to collective psychology "it's not free to us".
The automobile was enabled by the ability to tap vast stores of petroleum, which replaced scarce whale oil and made liquid fuels ubiquitous. The eighty-foot container, which didn't need a dock full of longshoremen to load and unload, made shipping cheap enough to tap abundant labor far away. Computers made information abundant. Just as water will always flow downhill, economies flow toward abundance.
Products that can become commoditized and cheap tend to do so, and companies seeking profits move upstream in search of new scarcities. Where abundance drives the costs of something to the floor, value shifts to adjacent levels, something management writer Clayton Christensen calls the "Law of Conservation of Attractive Profits. Only thirty-two of the Top companies today make things you can hold, from aerospace and motor vehicles to chemicals and food, metal bending and heavy industry.
The other sixty-eight traffic mostly in ideas, not resource processing. Some offer services rather than goods, such as health care and telecommunications. Others create goods that are mostly intellectual property, such as drugs and semiconductors, where the cost to produce the physical product is tiny compared to the cost of inventing it. Yet others create markets for other people's goods, such as mass retailers and wholesalers.
There's still a lot of money in commodities witness the oil- producing states , but the highest profit margins are usually found where gray matter has been added to things. That's what happened to the above list. A few decades ago, the most value was in manufacturing. Then globalization rendered manufacturing a commodity, and the price fell. So the value moved to things that were not yet commodities, further away from hand-eye coordination and closer to brain-mouth coordination.
Today's knowledge workers are yesterday's factory workers and the day before 's farmers moving upstream in search of scarcity. These days that scarcity is what former U. The constant challenge is to figure out how best to divide labor between people and computers, and that line is always moving. As computers are taught to do a human job like stock trading , the price of that job drops closer to zero, and the displaced humans either learn to do something more challenging or they don't.
The first group typically gets paid more than they used to and the second group gets paid less. The first is the opportunity that comes with industries moving toward abundance; the second is the cost. As a society, our job is to try to make the first group bigger than the second.
Abundance thinking is not only discovering what will become cheaper, but also looking for what will become more valuable as a result of that shift, and moving to that.
It's the engine of growth, something we've been riding since even before David Ricardo defined the "comparative advantage" of one country over another in the eighteenth century. Yesterday's abundance consisted of products from another country with more plentiful resources or cheaper labor. Today's also consists of products from the land of silicon and glass threads. IN , the Village Voice finally gave in. Forty years after its founding, the legendary publication stopped charging a cover price.
Like almost all other weekly city newspapers, it would become free, distributed in boxes on the street and in stacks at friendly retailers. This was pretty much universally marked as the dayhe t the Village Voice stopped mattering. A profile of the paper in New York magazine was headlined "The Voice from Beyond the Grave: The legendary downtown paper has been a shell of its former self since it went free nearly a decade ago. Started in as a free satirical broadsheet in the college town of Madison, Wisconsin, The Onion has grown into an empire.
Over the past two decades, it has expanded its regional print editions in ten other cities and launched a Web site that now gets millions of visitors each month. It publishes books, produces a TV show, and dabbles in feature-length movies. The Onion was born free, stayed free, and continues to thrive. On the face of it, the story of these two publications is puzzling, free seemingly killed one weekly newspaper but animated another.
In one case, free devalued the product, while in another it drove an impressive expansion. But it's not as simple as that. For starters, free didn't cause the demise of the Village Voice. As the New York article explained: Told that many writers felt that the impact of their work had been diminished when the paper went free, [publisher] David Schneiderman scoffed, adding that there was no choice.
Now the circulation is , Wouldn't you rather be read by twice as many people? It wasn't going free that hurt the paper. It saved the paper.
Kept it going, making money. In other words, the Voice had been in decline, at least in terms of its business fundamentals, for many years before it went free; people confused cause and effect.
Why do people think "free" means diminished quality in one instance, and not in another? It turns out that our feelings about "free" are relative, not absolute. If something used to cost money and now doesn't, we tend to correlate that with a decline in quality.
But if something never cost money, we don't feel the same way. A free bagel is probably stale, but free ketchup in a restaurant is fine.
Nobody thinks that Google is an inferior search engine because it doesn't charge. With The Onion and the Village Voice, we get at one crucial misconception about free, but only in the context of two prices — zero and non-zero.
In today's media marketplace, the psychology of free and therefore pricing is actually a bit more nuanced. Let me give you an example that is closer to home: a glossy monthly magazine. It can typically be obtained in several different ways. You can read it online for free, in a somewhat stripped-down form that trades the design and photography packaging of the print edition which is hard to re-create on the Web for instant accessibility.
The Web price free is the easiest. The cost of delivering the content is so low that publishers round down to zero and use free to reach the largest possible audience. That means they get between 1 and 4 cents of revenue for each page someone looks at.
The cost of serving that page is only a fraction of a cent. The rest of the costs are in creating the content in the first place, but publishers amortize that over the entire audience: The bigger the readership, the lower the cost per page. The newsstand keeps less than half, to pay their costs and make a profit. The rest goes to the publisher and provides a dollar or two of profit after the costs of printing and distribution. But for most magazines, more than half the copies they print don't actually sell, which means they are returned and pulped.
That can cut the profit considerably. So why bother with the newsstand? Because it's a good way to acquire new subscribers, since they can sample the real thing rather than just read a letter describing it. Plus, publishers can make a decent profit from the advertising in the copies that do sell. So far those prices are set by economics, not psychology. Well, here's where it gets interesting.
There's no magic at work here. Advertising makes a loss- leading subscription model profitable. And if the subscriber stays for three years or more, even the acquisition costs are repaid, making them more profitable yet. If the publisher is able to subsidize its subscribers by more than 60 percent, surely it could go all the way to percent and make the subscription free? Ah, now we're getting into psychology. The simple answer is that the act of writing a check or entering a credit card number, regardless of the amount, is an act of consumer volition that completely changes how an advertiser sees a reader.
Writing a check for any amount even 1 cent means that you actually want the magazine, and will presumably read it and treasure it when it arrives. In fact, advertisers will pay as much as five times more to be part of that relationship than they'll pay for a free magazine that may be treated as junk mail.
However, there are plenty of magazines that do give away free subscriptions. That's called "controlled circulation" and it's based on another currency: information. These magazines tend to be very focused business periodicals, such as those aimed at chief financial officers or others with corporate purchasing power, or targeted "tastemaker" lifestyle magazines. These business magazines' readers certify — well, claim — that they are important people with huge wads of cash to spend, and the magazine can use this information to charge the advertisers higher rates to reach them.
In this case, having a lot of desirable executives on their subscription rolls, each of whom has nominally filled out a form claiming to want the magazine, compensates in the eyes of the advertisers for the fact that these readers have not put any actual money where their mouth is.
The small print publication eventually grew into a record label, a retail clothing chain, Vice Film, and VBS. Okay, so that explains why most publishers don't give away subscriptions for free. That price is all about perception. It is the lowest sum that is not too low to devalue the product. Lower is better for subscribers, since the less they have to pay, the more likely they are to sign up. But higher is better for advertisers, because the more a consumer pays for a product, the more they value it.
That same devaluation of something very cheap can also affect how subscribers feel, but we can't measure it as well as we can the advertiser reaction. But in most cases, just a penny — a seemingly inconsequential price — can stop the vast majority of consumers in their tracks.
A single penny doesn't really mean anything to us economically. So why does it have so much impact? The answer is that it makes us think about the choice. That alone is a disincentive to continue. It's as if our brains were wired to raise a flag every time we're confronted with a price. This is the "is it worth it? If you charge a price, any price, we are forced to ask ourselves if we really want to open our wallets.
But if the price is zero, that flag never goes up and the decision just got easier. The proper name for that flag is what George Washington University economist Nick Szabo has dubbed "mental transaction costs. We're all a bit lazy and we'd rather not think about things if we don't have to. So we tend to choose things that require the least thinking.
The phrase "transaction costs" has its roots in the theory of the firm, Nobel Prize-winning economist Ronald Coase's explanation that companies exist to minimize the communications overhead within and between teams. This refers mostly to the cognitive load of having to process information — figuring out who should do what, whom to trust, and the like.
Szabo extended this to purchasing decisions. He looked at the idea of "micropayments," financial systems that would allow you to pay fractions of a cent per Web page you read, or millieuros for each comic strip you download. All these schemes are destined to fail, Szabo concluded, because although they minimize the economic costs of choices, they still have all the cognitive costs.
For example, consider a PowerPoint presentation on "ten time-saving ideas for a penny each. Many potential customers would be put off by the payment and decision process. Meanwhile the revenues generated by such micropayments are, by definition, tiny. It's the worst of both worlds — the mental tax of a larger price without the commensurate cash. Szabo was right: Micropayments have largely failed to take off. The gratis-only "sample salon" attracts visitors a day.
How can SampleLab not charge for every item it stocks? With 47, members, SampleLab is so hip, teens now have to make reservations one week in advance. SampleLab can carry 90 products at once. By offering extra free goods, SampleLab turns most of its members into a focus group. Teens fill out product- specific surveys online, on paper, or via keitai cell phone. If 20 percent of its clients pay for the feedback, SampleLab earns a little less than half the monthly revenue it does renting shelf space.
So charging a price, any price, creates a mental barrier that most people won't bother crossing, free, in contrast, speeds right past that decision, increasing the number of people who will try something. What free grants, in exchange for forsaking direct revenues, is the potential of mass sampling. After examining mental transaction costs, Clay Shirky, a writer and NYU lecturer, concluded that content creators would be wise to give up on dreams of charging for their offerings: For a creator more interested in attention than income, free makes sense.
In a regime where most of the participants are charging, freeing your content gives you a competitive advantage. And, as the drunks say, you can't fall off the floor. Anyone offering content free gains an advantage that can't be beaten, only matched, because the competitive answer to free — "I'll pay you to read my weblog! It is a strategy that works well when no one else is using it — it's good to be the only person offering free content.
It's also a strategy that continues to work if everyone is using it, because in such an environment, anyone who begins charging for their work will be at a disadvantage. In a world of free content, even the moderate hassle of micropayments greatly damages user preference, and increases their willingness to accept free material as a substitute. Note that there are other mental transaction costs to free — from worrying if it's really free to weighing nonmonetary costs such as considering the environmental impact of a free newspaper or just fearing that you'll look like a cheapskate.
One friend tells me the giveaway furniture he puts outside his house is only taken at night. But those costs aside, taking money out of the equation can greatly increase participation. Venture capitalist Josh Kopelman of First Round Capital looked at this psychological barrier to paying and realized it made nonsense of the usual teaching about pricing strategy. Rather than supply-and-demand curves turning price into a classic econ calculation, there are really two markets: free and anything else.
And the difference between the two is profound. In a sense, what free does is bend the demand curve. As Wharton professor Kartik Hosanagar says: "The demand you get at a price of zero is many times higher than the demand you get at a very low price.
Suddenly, the demand shoots up in a nonlinear fashion. However, that's rarely the case, as Kopelman explains: Most entrepreneurs fall into the trap of assuming that there is a consistent elasticity in price — that is, the lower the price of what you're selling, the higher the demand will be.
The biggest gap in any venture is that between a service that is free and one that costs a penny. So from the consumer's perspective, there is a huge difference between cheap and free.
Give a product away and it can go viral. Charge a single cent for it and you're in an entirely different business, one of clawing and scratching for every customer. The truth is that zero is one market and any other price is another. In many cases, that's the difference between a great market and none at all. But in the s, a new branch of economics emerged that looked at the psychology driving economic behavior. Called "behavioral economics," today the field ranges from game theory to experimental economics.
Ultimately, what it tries to explain is why we make the economic choices we do, even when they aren't necessarily the most rational ones. In Predictably Irrational, Dan Ariely describes several experiments he and his colleagues have conducted to try to understand just why this word "free" is so powerful.
The first experiment involved chocolate. Note: Behavioral economists have limited budgets and limited time, so a lot of their experiments involve a folding table, candy, and random college students. So take the results as directionally interesting rather than rigorously quantitative.
The researchers sold two kinds of treats: prized Lindt truffles from Switzerland and ordinary Hershey's Kisses. They priced the Lindt truffles at 15 cents about half the wholesale price and the Kisses at 1 cent. The customers behaved pretty rationally, calculating that the difference in quality of the two chocolates more than made up for their difference in price: 73 percent chose the truffle and 27 percent chose the Kiss.
Then Ariely introduced free into the equation, lowering the price of both chocolates by 1 cent. Now the Lindt truffle was 14 cents and the Kiss was free.
Suddenly the humble Kiss became a hit. Sixty-nine percent chose it over the truffle. But the introduction of zero caused the customers to reverse their preference. The psychologically confusing thing in this case is the comparison between two products, one of which is free. Sometimes free makes perfect sense, as in the case of a bin of free athletic socks in a department store.
There's little downside to taking as many as you want aside from looking like a bit of a miser. But imagine if you went into the store expressly to buy a pair of socks with a nicely padded heel and gold toe. As you reach the sock section, you are distracted by the free version and you end up walking out of the store with something you didn't want socks with no padding or gold toe simply because they were free.
What is it about free that is so enticing? Ariely explains: Most transactions have an upside and a downside, but when something is free! I think it's because humans are intrinsically afraid of loss. The real allure of free! There's no visible possibility of loss when we choose a free! But suppose we choose the item that's not free.
Uh-oh, now there's a risk of having made a poor decision — the possibility of loss. And so, given the choice, we go for what is free. There are similar experiments at a larger scale going on every day around us, often by accident. One such example is Amazon's free shipping. When Amazon rolled this out, it worked great: Sales of second books skyrocketed.
Well, everywhere except in France. What was different about the French? It turns out that they were presented with a slightly different offer. When Amazon rolled out free shipping across all of its national sites, the French one mistakenly set the shipping price to 1 franc, or about 20 cents. That tiny amount completely eliminated the second-book effect. When Amazon fixed this and France joined the other countries in offering free shipping, the French consumers behaved like everyone else and decided to add the second book to their shopping cart.
Interestingly, Amazon was actually sued for this. A French law, pushed through by then- minister of culture Jack Lang, forbids booksellers from offering discounts of more than 5 percent off the list price.
In , the French Booksellers Union took Amazon to court, arguing that it was exceeding that discount when the free shipping was factored in. After all, free would surely bring in more than enough to make up the difference. Zappos, the online shoe retailer, goes even further: It offers free shipping both ways: to you and, if you want to return the shoes, back to the warehouse. The point is to eliminate the psychological barrier to buying shoes online, which is that they may not fit. What Zappos wants you to do really!
Hopefully, you'll like a pair or two and send the rest back; you only pay for what you keep. The cost of the shipping is built into Zappos's prices, which are not the lowest around, but to its many happy customers, the convenience is worth it.
From a psychological perspective, the use of free in Zappos's case is simply risk reduction. The only reason to drive to a shoe store is to know that the shoes fit and look good on your feet.
By bringing the shoes to you at no additional cost, Zappos reaches risk parity with a physical store, and gains convenience advantage.
The only problem, says CEO Tony Hsieh, is that many people still feel guilty about ordering more shoes than they want and sending them back.
It wouldn't be a problem if they just didn't send them back that's a sale! Once again, the enemy of free is waste. To order shoes you don't really want and send them back feels wasteful, and indeed it is, from the labor of the workers and delivery people involved to the carbon emitted in the transportation.
Simply taking money out of the equation isn't enough to fully eliminate the perception of a price, in this case an amorphous social and environmental cost rather than a direct hit to your wallet. Behavioral economists explain much of our perplexing responses to free by distinguishing the decisions made in the "social realm" from those made in the "financial realm. It's an impossible calculus, and in the face of that, some consumers just shut down: They don't take the offer, even though it's free.
Ariely demonstrated the distinction between these two realms with another experiment: He put six-packs of Coke in college dorm refrigerators. He also left plates of money. People quickly took the Coke, but didn't touch the money. They treated the Coke as "free," even though they know it costs money. But taking actual money felt like stealing. This was a scientific meeting, and it was attended mostly by non-Googlers, largely academics.
They kept returning to the rack, understandably impressed by the opulent display of gratis goodies. It's interesting to imagine how that would have been different had Google charged a price for those snacks, even just a dime. I'll bet that a lot less would have been taken, and a lot more people would have finished what they took. Dengan perjanjian Hudaibiyah, banyak suku lain di luar Mekkah yang berbondong-bondong masuk Islam.
Termasuk suku Khuzaan. Suku Khuzaan merupakan suku yang memiliki sejarah permusuhan dengan suku Bakr yang saat itu bergabung dengan kaum kafir Quraisy. Mengetahui hal itu, pihak Quraisy pun memerintahkan suku Bakr untuk memerangi musuhnya, yaitu suku Khuzaan. Sebelum terjadi peperangan, rencana penyerangan itu sampai ke telinga Rasulullah.
Sehingga Rasul beserta pasukan kaum Muslim pun memutuskan untuk mendatangi kaum Quraisy di Mekkah lantaran telah melanggar janji perdamaian Hudaibiyah. Besarnya jumlah kaum muslim yang turut serta inilah yang membuat kafir Quraisy ketakutan. Terlebih, bahwa mereka berada di pihak yang salah karena telah melanggar janji perdamaian.
Sehingga menduga pasukan Muslim akan membalas kekejaman seperti yang dilakukannya kepada kaum muslimin dahulu kala. Untuk menghindari bentrokan dengan kaum Kafir Quraisy, Nabi Muhammad dan rombongannya mengambil lima rute yang berbeda hingga sampai di wilayah Hudaibiyah, Mekkah. Setelah sampai di Mekkah, diluar dugaan kaum kafir Quraisy yang mengira bahwa pasukan Muslim akan menyerang kaum mereka, Nabi Muhammad justru memerintahkan penduduk Mekkah untuk masuk ke rumahnya masing-masing.
Dalam beberapa sumber ditulis,. Dari peristiwa tersebut, dapat dipelajari bahwa Nabi dan kaum Muslim telah menaklukan hawa nafsunya untuk balas dendam, sebagaimana yang telah Nabi peringatkan ketika usai perang Badar bahwa perang paling besar adalah melawan hawa nafsu. Dengan strategi yang beliau terapkan, yaitu bukan bagaimana memusnahkan musuh dengan pertempuran, tapi bagaimana meminimalisir korban sampai sedikit mungkin terjadi kematian pada kedua belah pihak.
Strategi Nabi tersebut mengantarkan umat Islam pada perdamaian tanpa ada pertumpahan darah. Pasalnya, menang tidak mesti menindas, menang tidak harus mencaci maki, menang tidak harus mengucilkan kelompok lain agar diakui sebagai pihak yang kuat. Karena sejatinya, kemenangan berasal dari kedamaian diri sendiri yang didapatkan dari kemampuan kita untuk melawan hawa nafsu.
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Now the tables are turned. So there! But we want something in return. None of your driveling, mindless comments. Three months later, the results of this rash experiment with free were in.
Free worked, and worked brilliantly. More than 2 million people watched the clips on YouTube as word of mouth spread and parents introduced their children to the Black Knight and the Dead Parrot Sketch.
Thousands of viewers were reminded how much they loved Monty Python and wanted more, so they ordered the DVDs. There are countless other cases just like this online, where pretty much everything is given away for free in some version with the hopes of посмотреть еще something else—or, even more frequently, with no expectation of pay at all.
Everything else I do on this computer is free, from my email to my Twitter feeds. Therein lies the paradox of Free: People are making lots of money charging nothing. How did this happen and where is it going? For me, it started with a loose end in The Long Tail. My first book was about the new shape of consumer demand, when everything is available and we can choose from the infinite aisle rather than just the best-seller bin.
The result was the birth of a wildly diverse new culture and a threat to the institutions of the existing one, from mainstream media to music labels. As I marveled over the consequences, I started thinking more about logic pro x for windows 7 8 10 by paidversionfree.com free, and realized just how far it had spread.
Most of us depend on one or more Google services every day, but they never show up on our credit card. No meter ticks as you use Facebook. Wikipedia costs you nothing. Twenty-first-century free is different from twentieth-century free. Somewhere in the transition from atoms to bits, a phenomenon that we thought we understood was transformed. Surely economics must have something to say about this, Logic pro x for windows 7 8 10 by paidversionfree.com free thought.
No theories of gratis, or pricing models that went to zero. In fairness, some do exist, as later research would reveal. Somehow an logic pro x for windows 7 8 10 by paidversionfree.com free had emerged around free before the economic model that could logic pro x for windows 7 8 10 by paidversionfree.com free it. Thus this book, an exploration of a concept that is in the midst of radical evolution.
As I came to learn, free is both a familiar concept and a deeply mysterious one. It is as powerful as it is misunderstood. The free that emerged over the past decade is different from the free that came before, but how and why logic pro vst instruments rarely explored.
There really is A free lunch. Sometimes you get more than you pay for. This was a fun book to write. It took me from the patent medicine makers of late-nineteenth- century America to the pirate markets of China. I dived into the psychology of gifts and the morality of waste. I started a project on the side to try out new business models around electronics where the intellectual property is free a model known as open source hardware. I got to brainstorm with my publishers on the many ways to make this book itself нажмите сюда in most of its forms, while still creating ways for everyone who helped produce it to get paid.
In some ways, this was a public research project, as The Long Tail had been. But it took a different path, more in my own head than in a collectivecti a coll conversation with contributors online.
My research took me as often to archives and eighteenth-century psychology texts as it did to the latest Web phenomena. I found that the idea that you could create a huge global economy around a base price of zero was invariably polarizing, but the one common factor logic pro x for windows 7 8 10 by paidversionfree.com free that nearly everyone had their doubts.
At risk of ageist generalization, there were broadly two camps of skeptics: those over thirty and those below. They have internalized the subtle market dynamics of near-zero marginal cost economics in the same way that we internalize Newtonian mechanics when we learn to catch a ball.
The fact that we are now creating a global economy around the price of zero seemed too self-evident to even note. With that, I realized that this was a perfect subject for a book. Logic pro x for windows 7 8 10 by paidversionfree.com free hope that those who read this book, even if they start in one of those camps, will end in neither.
And it is doing so in ways that are forcing us to rethink some of our basic understandings of human behavior and economic incentives. It is about the past and future of a radical price. But if you collect enough of it and purify it, adding color and flavor, it becomes something else: Jell-O. A clean powder in больше информации packet, far removed from its abattoir origins of marrow and connective tissue.
InPearle Wait sat at his kitchen table poking at a bowl of gelatin. Although glue-makers had been producing it for decades as a by-product of their animal rendering, it had yet to prove popular with American consumers. For good reason: It was a lot of work for a pretty small logic pro x for windows 7 8 10 by paidversionfree.com free. Wait wondered if there might be a way to take gelatin more mainstream.
Earlier efforts to sell prepackaged powdered gelatin, including by the inventor of the process, Peter Cooper of Cooper Union famesold it plain and unflavored on the argument that this was the most flexible form; cooks could add their own flavors. But Wait thought that preflavored gelatins might sell better, so he mixed in fruit juices, along with sugar and food dyes.
The jelly took on the color and flavor of the fruits—orange, lemon, raspberry, and strawberry—creating something that looked, smelled, and tasted appealing. Colorful, light, and delightful to play with, it was a treat that could add jiggly, translucent fun to almost any meal. To distance the stuff further from its abattoir origins, his wife, May, renamed it Jell-O. They boxed it up to sell. Jell-O was too foreign a food and too unknown a brand for turn-of-the-century consumers.
Kitchen traditions were still based on Victorian recipes, where every food type had its place. Was this new jelly a salad ingredient or a dessert? For two years, Wait kept trying to stir up interest in Jell-O, with little success. Eventually, inhe gave up and sold the trademark—name, hyphen, and all—to Orator Frank Woodward, a local businessman.
Woodward was a natural salesman, and he had settled in the right place. LeRoy had become something of a nineteenth-century huckster hotbed, best known for its patent medicine makers.
Woodward sold plenty of miracle cures and was creative with plaster of paris, too. He marketed plaster target balls for marksmen and invented a plaster laying nest for chickens that was infused with an anti-lice powder. It was a new product category with an unknown brand name in an era where general stores sold almost all products from behind the counter and customers had to ask for them by name.
Nico refused. Woodward figured a usage guidebook might help create demand for Jell-O, too, but how to get them out there? Nobody was buying the boxes in the first place. So in Woodward and his marketing chief, William E. Humelbaugh, tried something new. If, however, you desire something very fancy, there are hundreds of delightful combinations that can be quickly prepared.
They could knock on doors and just hand the woman of the house a free recipe book, no strings attached. Printing paper was cheap compared to making Jell-O. After blanketing a town with the booklets, the salesmen would then go to the local merchants and advise them that they were about to get a wave of consumers asking for a new product called Jell-O, which they would be wise to stock.
The boxes of Jell-O in the back of the buggies finally started to move. Bythe campaign had turned into a runaway success. Two years later Jell-O hit a million dollars in annual sales.
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