I picked up Chris Anderson’s new book, “Free,” from the library this weekend.
The book is mainly about how things “made of ideas” are getting cheaper and cheaper to produce and distribute on-line, and that as Steward Brand famously declares: “information wants to be free.”
Because on-line storage, processing and bandwidth have become so inexpensive, companies can now pursue new business models that offer stuff for free. They can simply make up the lost revenues elsewhere like Amazon does when it offers free shipping if your purchase is over $25 (they know you’re more likely to buy more). Or when Google gives away its search and email and makes money on its advertising.
Anderson believes this is the new order of business—that the downward pressure on digital-related prices will affect most, if not all, on-line businesses. He likens it to the law of gravity. You can fight it for a while but eventually you must succumb.
Like his book, “The Long Tail,” “Free” presents an interesting and provocative premise which forces us to rethink the nature of business on-line in ways no one could have imagined even 10 years ago. It is especially relevant to struggling media companies, like newspapers, network TV, commercial radio, magazines, publishers and the like, all of whom need to, and, of course, are, rethinking their business models. The idea of giving their intellectual capital away is a hard pill to swallow, but there are many valuable suggestions in the book on how to make it up elsewhere.
After all, Free doesn’t mean not making money. Free means making money by giving stuff away. Of course, promotion companies have practiced this for ages. But, it’s now, according to Andersen, worthy of a higher level of business consideration and capable of creating much greater sustained commercial value. It’s no longer tactical, but strategic.
In essence, if you build a popular brand, you can extract value…somewhere. You just have to be a bit more imaginative.