But what about the competition? What about the time-saving, risk-lowering, beloved alternatives somebody else is offering free? Even Anderson himself equivocates, flinching at the implications of almost limitless competition. But there are hints throughout the book that the future of this radical price is to be found in the past, when satisfying work was what one did on the income provided by less satisfying toil, or by investments, patronage or marriage.
All this free stuff raises the real standard of living, by making it ever easier for people to find entertainment, information and communication that pleases them. Business strategy, however, seeks not only to create but to capture value. Simply put, if people did not have to work in order to eat and house themselves, most probably wouldn't, and with good reason.
Anderson also seems to think that "waste," which he always uses in scare quotes which humans are trained to think of as a bad thing, as a byproduct of abundance is not inherently bad. Waste is why billions of plastic bottles and plastic bags among countless other disposable things are thrown away and wind up poisoning our environment and oceans. Waste comes from mountaintop extraction, which brings us cheap coal-powered electricity, and leads to loss of ecosystems, polluted waterways and displaced communities.
Waste comes from the wars overseas that keep people in the US knee deep in oil. I don't know how anybody can put such blinders on and say that waste is okay because it gives us free information online.
That nothing comes without a cost is an idea that Anderson tries to debunk, but I can hardly agree with that statement.
Industrial pollutants are created in abundance because of the semiconductor industry. While transistors may be made of "sand" Silicon , Anderson clearly has no idea that Silicon processing uses among the most toxic chemicals ever invented. Silane gas, arsenic gas, hydrofluoric acid, to name just three. The overabundance of cheap electronic gadgets and computers leads to computer waste that is discarded overseas and leads to health problems and death in third world countries.
The information that I can easily access online for free would not exist without these costs. Just because I am not paying them does not mean they don't exist. Anderson also seems to believe that technology will eventually solve all of our problems, and that there is no limit to human ingenuity. I find this position to be naive and ignorant of what really drives abundance, which is global capitalism. Perhaps problems will be solved, but only for those with enough money to pay for it.
For example, Anderson holds high hopes that biofuels could be used as a source of free electricity. Obviously this is not the last bit realistic. In summary, I find this book to be somewhat sensationalist without being realistic. While I can't deny that the Internet provides vast resources of information for, as far as my wallet is concerned, little to no cost, I simply can't deny that it comes without any cost whatsoever.
Anderson paints a very myopic picture of the wonders of free technology without looking at the larger implications or completely ignores that they exist. Jun 09, Otis Chandler rated it it was amazing Shelves: business , nonfiction. A business classic that everyone should read. Explains 20th century and 21st century economics from a big picture perspective. Give away one product to make money on another cell phones to sell plans, razor blades to sell razors, jello cookbooks to sell jello, etc.
This is the concept of a "loss-leader", and is the basis of much of 20th century marketing. Things that have always been free can still have a high perceived value. Koppelman says many businesses can't make the leap. Free is disposable so we can't make a bad decision by choosing it - it's a psychological thing. A true competitive market was mostly an economic theory as most real economies have inefficiencies the products are somehow differentiated.
However with digital economies we finally have true competitive markets, with marginal costs so close to zero that it's often rounded down. Time is money!
People will pay for status or to save time in a game, even if they wouldn't pay for the entire thing. Bands in China and Brazil give away as many free copies of their album in towns they visit as possible to get everyone to buy a ticket to their concert.
View 1 comment. Shelves: it-busines-and-management , economics. Of course, the intent of such a proclamation is to startle people unfamiliar with online dynamics -- which makes you wonder what tiny portion of his audience is actually startled. Their product certainly di In Free: The Future of a Radical Price Anderson insists that the way to profit online is to give products away. Their product certainly didn't appear to be free to advertisers.
And if they didn't know that or recognize the significance, then they surely know it now. Anderson acknowledges that "Free" yes, he capitalizes it throughout the book isn't really free and it is not really new, but then says to his reader that he's still going to call it Free-- as well as new and radical -- anyway.
So, what are the ostensibly new, free business models? The 50 ct daily newspaper isn't completely free, although the alternative weekly or daily often is. The 50 cent cost of the daily, though, never sustained the true costs of producing the paper. So what does? The advertisers. It's true, a lot of consumers don't think like that. A version of it can be seen when you get a weekly paper free at the newstand, but pay for it's delivery to your doorstep. Another version is free tickets for students, but paid tickets for the employed.
It's an old model, it's just exploited far more online. How does free work online? You get a stripped down version for free, but if you want more features, then you pay. The classic example is Flickr. The more hardcore photographers -- remember, a group that has grown manifold with the introduction of digital cameras -- are the people will feel constrained by the limitations of a free Flickr account. Hence, they pony up for more features. Flickr is free to cheapskates, comes at a very affordable price to power users.
Anderson exclaims that Flickr "doesn't even use advertising. Anderson appears to have been blinded by the very circuitous path to payment that is actually part of the psychology of free. It's not just that power users are paying for premium accounts, subsidizing the cheapskates. Flickr is also supported by advertising. When a user uploads a photo, information is pulled out of the EXIF data embedded in digital images.
That data is used to create a link to the camera she used to take the photo. That link to, say, a Canon camera goes to a product listing page.
When you click another link to find out more details or read reviews, you end up at Yahoo's shopping pages. Guess who's paying? Yahoo owns Flickr, and it owns it in order to drive consumers to its shopping pages where they present millions of eyeballs to advertisers. Thus, the biggest take-away for business developers and executives is that circuitous is the word of the day. Someone really is paying, and may be paying a great deal; the path to that payment is circuitous. Making money in such an environment requires a lot more creativity and not just a steel constitution, but a titanium one.
The titanium constitution would be necessary for managing the psychological stress and risks involved in cooly calculating that such circuitous paths will not only make money, but won't be a nightmare to manage in terms of being able to monitor whether your gamble is truly paying off. The claim is that the nonmonetary economy works according to altruism.
He isn't persuasive at all. For instance, Anderson's other examples make it clear that altruism isn't operative. You exchange your labor for access - to get something, not out of the goodness of your heart. Google gives away its service in order to gain access to your labor: you are giving Google data which will help them improve their voice recognition service. It's "free" only because the psychology of free works on you - and quite well on Anderson as well.
It's using your free labor, so it doesn't have to pay people now, to make money later. As I mentioned above, anyone making decisions about long-term strategies like this is going to need a titanium constitution. As you can see, though, there's nothing new or free about these models. Someone is paying, somewhere, somehow. What might be new is that the path to payment is more circuitous. But I don't think that's true either. Have you ever wondered how Reader's Digest Sweepstakes makes money? Well, it certainly isn't just because it's a marketing gimmick to increase subscriptions.
That's part of it, but that's a lot of effort to go through, just to get more eyeballs to their pages so those eyeballs can read advertisements. Reader's Digest is also collecting data. Sure, there's the obvious marketing and demographic data.
If you buy a Redbook subscription are you also the kind of person who also orders a Sports Illustrated? That's always good information if you're a business product developer, a marekter, etc. But more, Reader's Digest historically created what was called the 'Sucker List. Valuable data: you're not worth the time of companies that need you to be a little bit of a sucker in order to buy their products.
If you haphazardly and quickly fill out their sweepstakes form without buying a sub -- remember, no sub required! They also know you're quick to make decisions. Perhaps even spontaneous. If you wait on the decision but eventuallyl enter without buying a subscription, you're not quite as quick and freewheeling as others. If you fill out the sweepstakes and buy a subscription because somehow you imagine this will increase your chances at winning, you're a bigger suckers than people who don't buy a sub.
There may be more of them, not fewer, as the ability to participate in journalism extends beyond the credentialed halls of traditional media. Journalism as a profession will share the stage with journalism as an avocation. If so, leveraging the Free—paying people to get other people to write for non-monetary rewards—may not be the enemy of professional journalists.
Instead, it may be their salvation. And then there is his insistence that the relentless downward pressure on prices represents an iron law of the digital economy. Why is it a law? Free is just another price, and prices are set by individual actors, in accordance with the aggregated particulars of marketplace power. Amazon wants the information in the Dallas paper to be free, because that way Amazon makes more money.
Why are the self-interested motives of powerful companies being elevated to a philosophical principle? But we are getting ahead of ourselves. The cost of the building blocks of all electronic activity—storage, processing, and bandwidth—has fallen so far that it is now approaching zero.
In , Anderson says, a single transistor was ten dollars. In , it was five dollars. By , it was one dollar. Free : The Future of a Radical Price. Chris Anderson. And what happens when those things are then made available to the consumer for free?. A very powerful book, especially given it came out in already — very visionary at the time!
It makes a few very good points and most of its predictions ring true. About Us. Four Minute Books participates in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising commissions by linking to Amazon.