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Open source economics textbook

In another bite-sized piece of evidence of the trend towards ‘free’ Preston McAfee has written an open source economics text book – reported on Techdirt and in the LA Times.

The PDF is available for free and there is an ‘open source’ Word version where he will capture user suggestions.

In the digital world the marginal cost of producing an extra copy is zero – which is what underpins my belief in the trend towards free and the need for new business models. McAfee explains it like this in his textbook:

Economics studies the allocation of scarce resources among people – examining what goods and services wind up in the hands of which people. Why scarce resources? Absent scarcity, there is no significant allocation issue.

August 21st, 2008 | Category: free
  • I know you've written this elsewhere on countless occasions but someone, at some point, has to pay. The economics of the free aren't *really* free. It's kind of amusing that the new Masters of the Universe are on the commune sparking up a doobie whilst they broker the hundred million quid deals :-)
  • nic
    Heheh James. Absolutely right. McAfee may be doing this simply out of the kindness of his heart, but if I were to guess I would say that he is thinking this move will increase his value as a speaker or chances of getting tenure or something.
  • Nic, I think we have to differentiate between Free to make a market (or to flog a book) while offsetting (getting his salary paid elswhere ;-) ) as opposed to Free as sustainable model sans offsetting.

    This is why I think there are limits to the overall use of FreeConomics as a strategy, as opposed to using it as a tactic.
  • James - if there's no cost then no-one has to pay. In this case, the only cost is the time to write - distribution is completely free. What Nic has been writing about is the shift of where the value is held. As in the music industry, news, and books, pure data is becoming impossible to charge for. The value is shifting to either the content producer themselves (whether that's watching a musician live, listening to a lecturer or having a researcher at your establishment); or the user engagement that your content creates, which can be sold to advertisers. All data thus becomes, essentially, a marketing tool for something 'real'.

    Interestingly, Paulo Coelho now actively releases all his books free online. Why? He finds that his physical books actually sell better in countries where the book is spread heavily for free on P2P networks. The value is in the physical book; being able to have access to the raw words makes more people buy the book, rather than the opposite.
  • nic
    Alan - free sans offsetting and sans advertising is not a business model. Full stop. And, as Josh points out I would argue that advertising is best understood as another form of offsetting.

    Thanks for all the comments guys.
  • Arnab
    Come on guys, let's appreciate McAfee. Have we all become such confirmed cynics that we only know the price of everything but the value of nothing?
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