The head of Nemertes Research, most recently in the news for its controversial report about the internet running into capacity problems, has a somewhat bizarre and poorly reasoned column at Network World trying to make the claim that "free" isn't a business model, as a way to say that while she finds it annoying, the DMCA is probably a good thing. Her evidence is pretty weak. She uses the fact that Radiohead stopped offering downloads of In Rainbows as proof that free doesn't work, and says: "the free kind doesn't pay the mortgage." Except... that's wrong. Estimates on how much Radiohead made from the experiment already are in the $6 to $10 million range. That'll pay for quite the mortgage. Furthermore, that doesn't even take into account how the publicity from the offering got more people interested in Radiohead and interested in purchasing scarce goods from Radiohead, such as CDs or concert tickets. Even Thom Yorke from Radiohead has discussed how successful the promotion was.

The real problem is that people keep incorrectly thinking that when folks like myself talk about the importance of "free" that we're saying "give away everything for free and that's that." That's never been the case at all. What we (and plenty of others) have merely pointed out is that you should use "free" as a part of your business model -- and the trick is just figuring out which parts should be free and which you should charge for. Though, if you understand the economics, it's usually not that hard to figure out which is which. You would think that the head of a research firm would understand this -- especially since the column complaining that free doesn't pay the bills is available (whoops) for free online. Does Nemertes Research believe that there's no business model in television broadcasting? After all, TV shows are available for free, and I understand that some TV execs have very nice mortgages that they can pay. The fact is that just about every business model has some free components and some paid components. Getting so focused on the free components seems to blind some people to the possibility of paid components, apparently.

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