Constant Flux

“Information Wants To Be Free”. What this phrase means depends very much on who’s using it. Roger Clarke has researched the various places and ways that this phrase has been used.

When Richard Stallman uses the phrase, “free” means “freedom”. “I believe that all generally useful information should be free. By ‘free’ I am not referring to price, but rather to the freedom to copy the information and to adapt it to one’s own uses.”

Roger Clarke warned that “The catch-cry that ‘information wants to be free’ is ambiguous. It was originally an assertion that the natural state is for information to be available, not protected. “The word ‘free’ in ‘free software’ refers to freedom, not to price” (Stallman 1992). But it is capable of being bastardised into an assertion that ‘information wants to be gratis’. It is in the interests of business to preclude that bastardisation taking root”.

It seems that what Clarke has warned against is happening. Roy Greenslade has recently stated that “data must be free”, after the NYSE proposed price increases for access to stock market data. But is this truly a bastardisation of the term as Clarke has implied?

Steward Brand seems to be the originator of the term. He actually did mean “free” in terms of price. “Information Wants To Be Free. Information also wants to be expensive. Information wants to be free because it has become so cheap to distribute, copy, and recombine—too cheap to meter. It wants to be expensive because it can be immeasurably valuable to the recipient. That tension will not go away. It leads to endless wrenching debate about price, copyright, ‘intellectual property’, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.”

Brand’s analysis highlights the difference between economic value and utility value. Economic value typically means the price that producers can charge for a product. Utility value means what a product is worth to the consumer.

These two are quite separate. Take air for example. Air has great utility value to consumers, because without it, they’d be dead. However, air has no economic value, because people can’t be made to pay for it.

Even though information as a good has fantastic utility value, it does not immediately follow that it has great economic value.

In economics, goods can be grouped according to whether they are excludable and rival. In it’s natural state, information (just like air) is a public good, since it is nonrival and nonexcludable. Such goods can have no economic value, since they aren’t scarce, and nobody can be stopped from using them.

IP laws attempt to make information goods excludable. This turns them into something more like club goods, which while they aren’t scarce, are excludable. The interesting thing is that Mohr and Fourie (2004) state that the efficient use of a mixed good (club good) requires a zero price, because the marginal cost of adding another consumer is zero. (p.387, Mohr, P. & Fourie, L. 2004. Economics for South African students, 3rd ed. Pretoria: Van Schaik Publishers.)

Therefore, in the absence of IP laws, information goods can have no price. In the presence of IP laws, in order to be used efficiently, information goods should have no price.

Something important should be observed here. There is a difference between selling information as a good, and selling the production of information. It’s the difference between getting paid to produce information, or getting paid to copy existing information. It turns out that the latter method is economically innefficient.

Information producers should therefore get paid to produce information, but not for selling copies of existing information. Among other things, this also implies that open source companies will eventually replace propriety software companies, since they appear to be fundamentally more economically efficient.

Seems like information really does want to be free.