Free: The Future of a Radical Price
Most of the worry was already there. But Free provides structure. That is a benefit.
I chose to read Free while drinking herbal mint tea at Barnes & Noble. The venti tea cost $2.06 (I forgot to use my membership card). I was able to milk my tea for the several hours it took to read Free.
I did not pay for Free. Which means I read Free for Free.
By following the principles of Free, Barnes & Noble earned $2.06, instead of $25 something.
While I do not believe this pleases Barnes & Noble, they earned more than Amazon this time around. That is also a benefit and maybe a quandary. How to get herbal mint tea out of a Kindle. hmmm.
Chris Anderson got my attention and respect, although, I believe his publisher would have preferred a twenty dollar bill as well. I also give Wired my attention, so maybe it balances out. Tough equations.
I get the feeling Gladwell at the New Yorker felt Free was a bit weak around the edges. Godin seems to agree with Anderson, declaring Free is a done deal. Cuban’s post with the question Free or Freely Distributed is a must read.
My thoughts about Free are also Free to you, do with them as you will.
- First – Arguing about whether Free is good or bad or ugly is silly. As Anderson points out, the cost of providing digital Free is so inexpensive that it will be a major disruptive force in the economy for the foreseeable future. Not just the digital economy mind you, the whole economy.
- Second – Anderson wishes us to believe today’s free is different from yesterday’s free. I do not buy this, nor do I accept it for free. Free is and always will be a weapon, sampling device, or a function of cost shifting. The fact that it is now very inexpensive to do legally or illegally simply affects scale and timeline. If you sell a product that can be digitized you will be under pressure to find support from a product that can not be digitized.
- Third – Improved Access. You probably wouldn’t be reading this blog if it wasn’t for the idea of Free.
So, the book is worth a look if only to organize your thoughts for the tough fight ahead. He gives a great overview of the various FREE* business models that address some of my previous comments on his line of thought. I really am not all that afraid of Free, because in all truth sooner or later Cash must flow, it is just a question of how. (Fair Disclosure, I am a marketer and therefore some people feel Free is one-tenth of my vocabulary.)
The book is an enjoyable, quick read. My primary problem with Anderson is around what I consider to be his short shrift in discussing ownership.
- Ownership rights. The digital world is treading all over the question of ownership, justifying itself by claiming all ills are solved with broad distribution. We are told free redistribution can only benefit due to the principle of sampling, harm is only the imaginary term ‘opportunity cost.’ No worry that others are profiting directly from that redistribution while you must figure out something else to ‘sell.’ The problem here is the lack of choice presented to the owner, not whether the business model is smart or stupid. Fuzzy ownership can limit opportunity by damaging the ability to create contractual, mutually beneficial relationships. Currently, this is reality and business models must be created to generate revenue within this reality. I don’t feel the moral argument has been either won or even reasonably debated as of yet.
- Defeat Pirates With Better Product. If one has to live in a system where pirating is rife, then yes an economic model that operates on that assumption can be created. You can beat them on quality, organization and safety. You can also run a convenience store in a neighborhood featuring a Mafia protection racket. Simply because you can doesn’t mean this is the best economic model for society at large. It could encourage serious corporate espionage to heighten fear and reduce overall product safety. I accept that it is reality that must be lived with today, but don’t think the argument as to what serves man best has been decided.
- Cash Free vs Free. Anderson outlines the various modes of free quite well, however he minimizes the value being derived from personal data being required by some applications on the web. I hate it when I’m told Facebook is free. Or that the little microapps on Facebook are free. Every time I agree to ALL of my personal data being shared with an Easter Egg application I get queazy. In the free economy our attention, friendships, reputation and credit score may be the only currency of value.
Understanding how Free fits into your strategic basket is critical. Becoming active in how ownership will be defined as the digital age starts to mature is also critical. Being part of the discussion will give you a leg up on the answer, even if it is ‘deal with it.’
Great synopsis and insights.
I’ve been giving out tons of stuff for free for years and it hasn’t been a great business model in terms of funding, but it has been great in terms of mind share.
In fact, when i write my first non-tech book, I’m going to give it out for free and charge for incremental experience … free html, pay for PDF, pay more for print … and if you want me to come and read it to you live, then pay the most 🙂
.-= J.D. Meier´s last blog ..Finding a Way to Do the Things You Hate =-.
“Fuzzy ownership can limit opportunity by damaging the ability to create contractual, mutually beneficial relationships.”
Fred, I think this statement explains why information now gravitates toward free. The nature of the internet makes it exceedingly difficult to monitor, manage, and control the distribution of data. It’s like trying to own air. New business models are evolving to monetize information, and I think this is the only long term solution in a web-based economic infrastructure.
.-= Brad Shorr´s last blog ..Don’t Let Testimonials Dictate Your Marketing Strategy =-.
Thats a funny funny satire! Thats true nothing is free, Free is used as weapon. And yes its true how sometime that appears to be free may actually charging you something in terms of your personal data.There are so many thing out there to attract us in digital world but i agree how Free fits in our strategics basket.its very important to know. Last time when i got trapped in this Free mess was when Skype mailed me a voucher code through which i will be able to call to any landlines for Free for one month all over the world.But it turned out that every time i used it, Skype asked me to buy more credits for which i had to pay.I never understood why i have to pay for something that is Free? but as well said Free is a weapon! 🙂
Absolutely. In many ways that shows that today’s ‘Free’ economy, as Anderson calls it, is little changed from the old economy. Entrepreneurs looking for a way to scratch out a decent cash flow from innovating. I’m looking forward to the book!
it’s funny Brad, the more I think about it the more comfortable I am with how and idea like Free is forcing change. The reason fuzzy concerns me may come more from my first amendment roots and my natural distrust of monopolistic middlemen.
For this ‘Free’ economy to work, folks inputting value have to see value come out. Gatekeepers will attempt to capture the easiest and most direct forms of revenue. The question is, as the gatekeepers – the owners of wire and air or iron and screen – go from the growth curve they are on to the cut-throat competition to come, is there any doubt that they will use Free content to differentiate their own offerings? If ownership is fuzzy that could create situations that limit discourse and commerce in ways that are not ideal. (I’m now mixing the net-neutral arguments in but I think this all ties-in together.) Cell companies incorporate preferred connections into their calling plans already. If you’re not with AT&T it costs me more to talk to you.
So in the end, I agree with what you’re saying. The web-based infrastructure will be the solution and the ecosystem. My complaint about Free (the book) is really about the assumption it makes that natural market forces will reinforce it’s vision of Free where everyone can benefit, even the losers, versus one where large corporations can dominate in funky ways.
Fred, Futurists really have their hands full trying to figure out where all this innovation is taking us. I would rather take my chances with natural monopolies and corporate greed than see a web dominated by lawyers and bureaucrats. The former approach delivers at least some value; the latter approach delivers none.
.-= Brad Shorr´s last blog ..Don’t Let Testimonials Dictate Your Marketing Strategy =-.
Oops. Don’t want to go down that road. Much more belief in free market than that!
Fred,
What a great analysis of a murky topic. As an OOG (Official Old Guy, I could get Social Security $$s if I wanted) I find the free stuff disheartening. However, you closing comment about the cost of / to reputation put things in perspective for me. Nice job of wrestling wit this topic.
Bill
Thanks Bill. OOG? Certainly not in attitude!
Thanks for visiting Amy. Free as a trial tactic or short promotion is certainly used a lot. If the offer is confusing or poorly structured it can be terribly irritating.
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