Free – radical or not?

“Free” is a word that has many connotations and arouses strong feelings.

Giving away products and services for free in order to sell other products and services is a well-established marketing model. What is new in the digital world is how the marginal cost of delivering services has declined to near zero. That changes the economics, even turns them on their head. In his new book, Free: the future of a radical price (not free in physical form), Chris “Long Tail” Anderson explains how “freeconomics” works and how Free can be used successfully to turn a profit.

Critics are falling over themselves to pick holes in his arguments: “it’s not really free”, “but YouTube is making a huge loss”, etc, etc – “so there”. There’s a neat counter to many of the less-informed arguments which is “read the book”. Even the better arguments point only to examples of where Free fails – or rather appears to fail. But Free works for different services in different markets in different ways; Anderson does not suggest it works for all in the same way; a lot of experimentation (and luck) is required to find a Free model that works. So YouTube is losing millions; so what? Few would say that YouTube is not successful. It’s not making money now because, though bandwidth and storage costs are very low, for video clips they are not yet near zero, and in sum they are astronomical for YouTube. Google (which has the cash to burn) hasn’t yet figured how to recoup these costs. But if these costs fall – according to Moore’s law – by 50% per annum, and/or it finds a better way to “monetise” the service, maybe Google will turn a profit on YouTube soon. And let’s not forget that Google spent several years in the red with free search before it turned the books round spectacularly with AdWords.

So take this book for what it is: a readable and extremely informative explanation of how Free works and can work for you; Anderson certainly does not advocate giving everything away and hoping for the best.

One thought on “Free – radical or not?”

  1. I think Anderson’s explanation for the extensive plagiarism in Free falls short on several counts – I certainly wouldn’t recommend buying it on that basis alone.

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