Talk always has been cheap, but transistors have gotten cheaper. That changes everything. Why? Because information wants to be free. For clarification, please schedule (and be willing to pay for) an appointment with Chris Anderson, the editor-in-chief of Wired and author of The Long Tail: Why the Future of Business Is Selling Less of More, who now has written another book about Web-era economics, Free: The Future of a Radical Price.
Of course, in this context, "free," "future," "radical," and "price" are relative terms. But for Anderson, one self-evident absolute is that the Internet has made freeness inevitable and ubiquitously viable: The future of business is not just selling less of more, but also selling it for less, and sometimes for nothing.
This is not new (one variation is the three-party market system — of readers, advertisers, and journalists — by which free newsweeklies exist), but it is changing. "Today the most interesting business models are in finding ways to make money around Free," Anderson writes. "Sooner or later every company is going to have to figure out how to use Free or compete with Free, one way or another. This book is about how to do that."
Like so: Find a profitable way to give products away instead of selling them. "Give a product away, and it can go viral," he writes. "Charge a single cent for it and you're in an entirely different business." In other words, people won't pay a penny for crap, but they'll eat it by the bowlful so long as it's free. As for how to manage the cost of actually making your product, or how to hedge against the fact that just because it can go viral doesn't mean it will, well, you're on your own.
Which is not to say that Free lacks illustrative examples and clever observations. "The more products are made of ideas, rather than stuff, the faster they can get cheap," Anderson writes. So if you happen to be Google, for instance, you could give away Web searches and e-mail and such and become one of the world's biggest companies, selling lots of highly targeted advertising all the while. But then, if you happen to be Google, you already knew that.
For everyone else, Anderson supplies historic tales of paradigm-shifting products such as disposable Gillette razor blades, which helped popularize "one of the most powerful marketing tools of the 20th century: giving away one thing to create demand for another." (Sell the razors by bulk at low margins, profit from high margins on the blades.) What he believes the next century will require is the further evolution of that loss-leader mentality: a widespread change from "scarcity thinking" to "abundance thinking."
"If you're tapping into abundant resources," Anderson writes, "you can afford to take chances, since the cost of failure is so low. Nobody gets fired when your YouTube video is only seen by your mom." Yeah, okay, but nobody gets hired either. Not that that's Anderson's fault. Maybe it's your mom's fault, for being such an enabler of your squandered life. But at least everybody else's mom seems to have made the same mistake.
First published in free digital and paid print versions, Free has been noticed by mostly by media-industry professionals (and nonprofessionals), particularly the self-consciously endangered species of hand-wringing journalist who likes to write articles mostly for other journalists and wonder why regular readers don't care. For such people, Free is essential reading, and sometimes very compelling — but also sometimes boring, chorelike, and, in the end, not very useful. Quoth Malcolm Gladwell: "Does he mean that The New York Times should be staffed by volunteers, like Meals on Wheels?"
Not exactly, but Anderson doesn't necessarily have a better idea. He essentially concedes that what we've already learned is still true: Free works until it doesn't. Even an infinite profusion of products made of ideas won't cover all the costs of products made of stuff.
Yet Anderson, who has said he doesn't like to use the words "news" and "media" and "journalism," stays his course, breezing right through this conference keynote speech of a book and hocking the premium edition — a live Chris Anderson keynote speech, exclusive to your conference! And you can bet he doesn't give those speeches for free.