This article was originally published on March 8th, 2010. The power of free continues to be a hot topic in the world of business. Is it a good or bad thing? We’re not quite sure yet.
Free becomes an economically viable price when the marginal costs of transferring digital information moves towards zero; which changes the structure of traditional markets.
Ideas, Implications, and Questions
- How do we support people who are creating and disseminating information? When addressing the downward trend of newspaper circulation and ensuing layoffs, Chris writes “There may be more of them (journalists), not fewer, as the ability to participate in journalism extends beyond the credentialed halls of of traditional media.” (pg 235) It can be hard, though, for a blogging reporter to support themselves and family. I think that has to be more adequately understood.
- Can advertising really support all of the free content on the internet? What are the limits? What happens when people use open source software and Microsoft has to downsize? Is it OK that we don’t make as much money if we don’t have to spend as much? I don’t think that we’ve figured out the answers to these questions on a societal level. I think that Chris is also addressing a post-industrial economy where by comparison with past generations, we don’t have to spend a lot of time on “survival needs”.
- As someone who is deeply entrenched within the information economy, I have consider how much I can distribute for free and how I can use that as a sustainable business model. Two things that I found useful:
- Differentiating myself, and creating a superior product, is important – because prices among undifferentiated competitors falls to the marginal costs (pg 127). I have to find the challenges that my potential clients are struggling with, and solve them.
- Free can provide a powerful marketing tool. If I can provide valuable information that demonstrates competence, I can provide a higher level service for which people will pay (e.g. free blog articles to promote one-on-one coaching and public speaking). Part of the creativity lies in finding out what that higher level service is, as Chris writes, “The way to compete with Free is to move past the abundance to find the adjacent scarcity” (pg 231).
- Chris provides a powerful list of “ Free Rules” that encapsulate a lot of his thinking:
- If it’s digital, sooner or later it’s going to be free.
- Atoms would like to be free, too, but they’re not so pushy about it.
- You can’t stop free
- You can make money from Free
- Redefine your market
- Round down
- Sooner or later you will compete with free
- Embrace waste
- Free makes other things more valuable
- Manage for abundance, not scarcity
Should you read this book? Who should read this book?
Absolutely. While he might not have all the answers, Chris is examining a very real dynamic in our economy that is having massive (and novel) effects on how we live and work. Anyone who has an interest in digital media will get something from Free, but especially:
- Consultants, Authors, Bloggers, Coaches, Trainers, Speakers and basically anyone who uses digital media to market themselves
- People who want to switch from distributing traditional media forms to digital media – artists, writers, and especially musicians
- Companies and marketers who want to be on the leading edge of the free economy
- Professionals on the technical side of the free information economy – IT professionals, web designers, etc.