More Free Stuff

I saved some of my thoughts about the book Free for a second subsequent post. At the end of the book, author Chris Anderson outlines “The Ten Principles of Abundance Thinking,” and so I list them here:

If it’s digital, sooner or later it’s going to be free. In a competitive market, price falls to the marginal cost, and bits want to be free.
Atoms would like to be free, too, but they’re not so pushy about it. Businesses will always find ways to redefine their services to make some things free while selling others.
You can’t stop Free. In the digital realm you can try to keep Free at bay with laws and locks, but it is better to take Free back from the pirates, and sell upgrades.
You can make money from Free. Free opens doors, reaching new customers, and it doesn’t necessarily mean you can’t charge some of them.
Redefine your market. Changing your perspective opens up opportunities to make money around your core business.
Round down. The first to Free gets attention, and there are ways to turn that into money.
Sooner or later you will compete with Free. Match the price of your competitors or ensure that the differences in quality overcome the differences in price.
Embrace waste. If something is becoming too cheap to matter, stop metering it.
Free makes other things more valuable. Every abundance creates a new scarcity and when one service becomes free, value migrates to the next level, so go there.
Manage for abundance, not scarcity. As business functions become digital, they can also become more independent without risk of sinking the mothership.

I highly recommend reading Free regardless of one’s personal profession, as the ideas discussed in it are applicable across a range of industries. However, I find them particularly pertinent to those involved in the creative arts. Whether we like it or not, artists must adapt to the digitization of their creations and agree upon an equitable form of compensation.

Free for a Fee

Whether you are a producer or a consumer of media content or both, you cannot afford to not read Free: The Future of a Radical Price by Chris Anderson. The editor of Wired and author of The Long Tail: Why the Future of Business is Selling Less of More, Anderson has his finger on the pulse of creativity and commerce like few others.

As Anderson writes, “The new form of Free is based on the economics of bits, not atoms. It is a unique quality of the digital age that once something becomes [digitized], it inevitably becomes free—in cost, certainly, and often in price. And it’s creating a multibillion dollar economy—the first in history—where the primary price is zero.”

“The rise of ‘freeconomics’ is being driven by the underlying technologies of the digital age. Just as Moore’s Law dictates that a unit of computer processing power halves in price every two years, the price of bandwidth and storage is dropping even faster. What the Internet does is combine all three, compounding the price declines with a triple play of technology: processors, bandwidth, and storage,” Anderson continues.

Anderson is quick to point out the difference between free as in “freedom” (libre) and free as in “price-less” (gratis), i.e. free speech versus free lunch. Of the types of free (gratis) models, perhaps the most familiar one to readers is the “freemium” model, which is free to basic users and offers a premium paid version (think Flickr and Flickr Pro). The key to freemium is the Five Percent Rule: five percent of online users support all the rest.

To clarify an often-misquoted axiom, Anderson writes, “Commodity information (everybody gets the same version) wants to be free. Customized information (you get something unique and meaningful to you) wants to be expensive.” In other words, as long as there is a fee associated with its creation, information needs to be subsidized somehow.