Lispian Random meanderings on whatever catches my fancy


Just read Chris Anderson’s Free online via his online blog. You can get it in a variety of formats if you read through recent entries there, including an audio format.

Note that the book is available for free but not if you’re outside the US. The audio book is free regardless, it seems.

It’s an interesting read, but a quick read as well. I could probably summarize the whole book as follows:

Give away something that’s common or easily created in abundance while selling something that is rare or precious or more fully featured to those who wish a more intimate, more private, or simply more extensive instance of the thing you are selling.

Thus, he’s proposing that that which has become a commodity — too cheap to meter, say — should be given away or provided in an open fashion. That which is rarer, say the statistical analysis of some data, should be sold to those wishing access to it and then at a premium.

He even uses his own book as an example. The audio book is literally free (gratis). You can download it and listen to it. However, the abridged version is somewhere in the neighbourhood of $10us. The reason? Someone had to abridge it, which saves the listener time, which the listener would be willing to pay for — the saved time, that is. Same holds for the book. His attitude is that the book is easily copied once completed but if you want his time to discuss the book, in small or large groups, you’ll pay for the privilege.

All that makes perfect sense. And Anderson provides a vast number of examples of each type of “Free” that he defines:

  1. Direct Cross-Subsidies. What’s free is any product that entices you to pay for something else. Free to everyone willing to pay eventually, one way or another.
  2. Three Party Market. What’s free is content, services, software, and more. Free to everyone.
  3. Freemium. What’s free is anything that’s matched with a premium paid version. Free to basic users only.
  4. Nonmonetary Markets. What free is anything people choose to give away with no expectation of payment. Free to everyone.  (Anderson claims this takes several forms: Gift Economy, Labour Exchange, and Piracy).

You can argue or not with him, and Gladwell has. But it is well argued.

I didn’t find any surprises here. It’s all pretty obvious if you’ve been in high tech. He doesn’t explain how some of the free offerings will ever make enough money to actually cover their costs — like say YouTube. But he does point out various methods that do work.

My question re: free in general is whether there is a viable economic model for anything of substantive size. I agree that free on a small and medium scale works well, but I’ve not really seen it work on a large scale. I know some would point out Google, but Google is an advertising firm — or more accurately, a search engine that happens to also be the world’s biggest classifieds. Then again, maybe Google is the perfect example.

No matter, my issue is that there’s this little bit inside of me that screams “Dot Com” every time I turned a page of his book. The “new economics” and the notion that somehow all this would pan out to our benefit. It’s an interesting concept, but the economy is a lot more complicated and moving bits around is more than a creation ex nihilo so that there is no initial cost in said bits.  The way I look at it is thusly: Linux is free, but people put their time in there for free while having a real job that paid the bills — or they were students hacking away on the side between classes. The model of free works if you can give something away and make money on other pieces, but what if you’re not so lucky? How do you make money then? And how do you build up that initial package of “free bits” to give away that will entice others to give you money?

I don’t know. As I said, I can see it working for a lot of cases but it’s just not something that works for everyone. I just can’t see how the media can ultimately give away all their reporting, for example. Who’s going to pay the journalists, editors, etc. to put the information into useful packages? If the stuff is just given away how are these people to earn enough money? The crisis in the newspaper industry seems to highlight the fact that free isn’t a panacea.

Or maybe I’m just not bright enough to see how this can work for information. As it must. No exceptions. Because information, once “out there” is hard to contain.

But read the book. It’s well worth it from the perspective of trying to see if this will truly work beyond the small subset of instances it’s currently worked in in the world. Besides it’s free online so it’ll only cost you time, assuming you have time to spare. Then you can answer whether it is a new way of doing things or not. Personally, I don’t know but it is worth pondering.

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July 2009
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