The razor blades of the digital economy

Scott Karp is asking the right question. He wants to know how creative artists and writers are supposed to make money in the unbearably light new economy.

Karp should listen to the podcast of John Updike's recent speech at the Book Expo of America. Speaking in respone to Kevin Kelly's New York Times piece on the digital book, the great writer gets straight to the heart of the Web 2.0 business matter. Updike explains that Kelly wants the author to give the book away for free and then collect on what Silicon Valley people call, without irony, the "back end".

To excuse the literary pun, this is the oldest business model in the book. It's the razor blade business strategy: give away the razor, then charge for the blades.

As Updike observes, in Kelly's digital utopia, authors are expected to give away the copy of their "book" and charge for value added services -- such as in-person readings, lectures and interviews. Content builds brand; brand is money.

The writer in this new economy, therefore, makes money from everything except his writing. The writer's value is the personal recognition he can leverage from his content. Michael Goldhaber would say that this is the core truth of our new attention economy. Chris Anderson would welcome it as the "long tail." I would describe it as the transformation of art into self-promotion.

In his speech, Updike uses a historical metaphor to make sense of Kelly's vision. He says that it would be a return to the pre Gutenberg world where artist had no physical autonomy from their work. Gutenberg's printing press, with its ability to manufacture copies of the text, allowed the writer to sell his ideas without having to be physically present. If content is free, then the copy has no value. The writer can only make money by selling himself -- his presence, his voice, his signature. So the end result is doubly ironic: in the virtual economy, physical presence is the only thing that can be monetized. It's back to the future. Back to the Middle Ages.

But back to Karp's original question. Given that the writers are skilled in writing rather than in self-promotion, it is unlikely that they will flourish in the new economy. The winners will be sharp marketing mavens -- the real razor blades of the digital revolution.