"Free!", the upcoming book from Chris Anderson, explores the exciting new business concept of freebies. Okay, Wired's editor-in-chief isn't pretending he discovered loss leaders, ad-subsidized media and such; he's just the first to sell a book about it (coming this summer, though of course there will be a Free! version). For Anderson, the book means a Free! feature article in Wired, released today. It's 4,703 words! Here's the 100-word version, in Anderson's own (edited) words.
The new model is based not on cross-subsidies — the shifting of costs from one product to another — but on the cost of products falling fast.
The last debates over free versus pay online are ending. New York Times. Casual games. Google.
Two trends: 1. Extension of cross-subsidy to more industries. 2. Anything that touches digital networks feels the effect of falling costs. Transistors, storage, or bandwidth: at a certain point, they're cheap enough to be safely disregarded.
From the consumer's perspective, there is a huge difference between cheap and free. The gap is why Google doesn't show up on your credit card.
Free doesn't mean that someone isn't making money. The monetary benefits of Craigslist are distributed among its users.
The priceless economy's six categories:
- Freemium (tiers or a pro version, one percent of users support the rest)
- Zero marginal cost (online music)
- Labor exchange (Yahoo Answers)
- Gift economy (Wikipedia)
Manufacturing and distribution? Reputation and attention are the new scarcities.
Digital technologies have become too cheap to meter.