Underpricing your (digital) work is good

In every industry I’ve worked in, people have been obsessively concerned about underpricing their products.

Underpricing, they say, devalues the products (because, as Chris Anderson pointed out recently, they make the mistake that “the only way to measure value is with money”).

This “underpricing=bad” argument might have some mileage for products made of atoms, but when your products are made of ones and zeroes it becomes obsolete. That’s why it’s a nonsense to charge the same price for your ebook as you charge for the paperback (or, even worse, the hardback).

Of course, the ultimate underpricing is to make something free. Making something free doesn’t devalue it. I find a lot of value in Google, Flickr, Slashdot, numerous other websites and blogs, the Kubuntu installation on my computer, Mozilla Firefox, the WordPress software this blog runs on, PHP5 & MySQL, the NHS, Channel 4, free-entry to the collections at the Tate Modern (where I can gaze, without paying, at the Bacons, Picassos, Matisses…), even the free copy of the Metro newspaper I read on the bus every morning on the way to work. I value these things.

Telling people that you believe some things should be free can generate some aggressive criticism (as you’ll know if you’ve ever read the comments on, for example, Chris Anderson’s Long Tail blog). You can feel like you’re being accused of being a communist/hippy idealist with no idea about business models in the real world. I’m sure that those naïve hippy idealists at Google—who are making a killing with their business model in the real world—would disagree.

Why is it that so many people who see themselves as “traditional hard-nosed business” types are completely clueless when it comes to the internet, especially the more recent trends in social networking?

Because they’re desperately trying to impose yesterday’s business models on today’s business. Umair Haque points to the twin obsessions of “product” and “monetization”:

When you try and “monetize your users”, you accept the almost obscene assumption that people are meant to be pimped out, sold to the highest bidder, resources to be slashed, burned, and exploited.

Umair is certainly not against businesses making money. In fact he highlights the fact that many businesses’ attempts to make money on the internet can’t make any sustainable income (because they are so clumsily contemptuous of their customers in the pursuit of profit).

Actually he summarises his argument most succinctly while replying to a comment on that same post:

as for figuring out how to capture value – the point of the principle is that when we figure out how to capture value, we must do it in a way that doesn’t destroy any value we create.

How long would Google remain the search engine of choice by such a huge margin if it sold out its users and “monetised” its clean, clear, front page (which must be the primest piece of real estate on the net) by cluttering it with ads?

Meanwhile earlier this week Trent Reznor just grossed $1.6 million in the first week of sales of Nine Inch Nail‘s new album. My friend Barry examines the pricing policy in more detail, but the pertinent point here is that Reznor gave away a 9-track download of the new release for free.

$1.6 million says that his fans didn’t think that the free tracks devalued his music…