The future of a radical price
Chris Anderson’s book “Free, The future of a radical price” came recommended – and I enjoyed reading it.
Free explores the concept of building a business around that one word – free. The poster-child for the concept is of course google, and I’m a google proponent. I’ve used my free gmail account for a long time, set my browser home page to google.com (for both speed and ease of use), and enjoy several of the features google has added over the years.
In searching online for extra material for this review, I stumbled across the plagiarism aspect of the book, and that perhaps sets me back a bit, but read on and we’ll work through it…
In a nutshell…
The economic logic of the book is using the concept that a marginal cost that approaches zero will allow anyone to offer a service or product “free”.
That is, even if I have a 10 million dollar a year “fixed” cost, if I can produce a stream of products that are essentially cost-free, I can do “something” else to earn revenue other than charge the consumer directly. (and make money by creating a huge volume of “customers”)
Google doesn’t charge users for searching – but generates revenue from advertisers.
You’ll find lots of ways to look at that concept in the book – historical, conceptual, real-life, digital – and I won’t try to chop the volume into this space. Get and read the book yourself.
Practical or theoretical
When Anderson talks about an organization like Google doing this on purpose, I’m right there.
He makes less convincing statements when he suggests that Brazilian street vendors that sell unlicensed music are supporting the local band and everyone is cool about it.
From what he’s written, it sounds like the parties are in fact happy with the “share” they each get, but because we don’t know how all of the money flows, we’re not in a position to evaluate it. Is the band getting 1/3 of the total flow of money, or is the “producer” of the grey market CDs pulling in 90%?
It does seem to be a relationship that is working, but is it working well, and by offering the example, is he suggesting that something like that might work here?
For example – I’d be happy to make some copies of his book and offer it locally just before he arrives in town to do a speaking engagement… But I have the feeling that he (and/or his publisher) wouldn’t be very happy about that.
Free with a catch
It was interesting to read the book’s comments about the digital version of Free being available free, and then finding out that it was free for only a specific period of time.
So free was good for the publicity it generated, but not as a long term thing? If the book had no real marginal cost to give away to begin with, did it suddenly become expensive to offer?
I did enjoy the examples used, and that brings us to the aspect of lifting text…
It appears that Anderson conceptualized portions of the book and then looked up backgrounds and stories. He says he intended to provide proper credit, but his efforts to do so were sorely lacking. I’m not sure how one goes about cutting text out of a source and modifying it only slightly.
If it was going to be quoted verbatim, it would have been lifted verbatim. If it was going to be paraphrased, then it would have been paraphrased initially. In either case, it would be easy enough to properly credit the source.
The Virgina Quarterly Review broke the story and took this matter up in June – and I’ll let you read there and come up with your own conclusions.
Free as in a library
Once again I utilized my local library and borrowed this book … And that is one of those “public good” sorts of free.
As a tax-payer, I do support the library, but not in a way that I’m paying a separate bill.
As a consumer of the “service” of the library, I have no cost associated with taking any specific book out. If I’d like the library to move a book from another branch to my neighborhood, or put a hold on a book, I’ll pay for that.
In this case, I believe I am offering “extra” support for the library in that I’ll pay an overdue fine of a dollar or two – and I’m aok with that;-)
Leading to free
And here’s a concept Anderson doesn’t bring out that I will for you – he’s suggesting that prices will tend to approach zero, not that they must be zero today.
That doesn’t mean that you have to adopt a zero-price model overnight, but you ought to be aware of the trend and plan accordingly.
And that’s something to think more on…