Chris Anderson’s, he of Long Tail fame, new book Free is causing a stir. As it should do. The topic of free is a hugely complex one. It’s been brought on by the culture inhabiting the internet and is currently contributing to the part-demise of the print industry. More deaths will follow.
In particular the debate on this subject between Seth Godin and Malcolm Gladwell is interesting and worth a read. That is anybody wishing to participate in this economy as a marketer or business person should be following this discussion.
Chris Anderson says in his book that the ‘digital age is exerting an inexorable downward pressure on the prices of all things “made of ideas” further writing that ‘you can try to keep Free at bay with laws and locks, but eventually the force of economic gravity will win”.
Seth Godin surmises that Free is what you need to have in an attention economy. As a marketer or business person you struggle for the attention of your customer or consumer. How do you get it? By giving away something. This is because the interruption process TV advertising used to use is no longer popular.
Malcolm Gladwell on the other hand has a great argument that says that it might appear that certain areas of our lives should be free because the cost has come down to such an extent.
He gives the internet as an example. Hardware is now unbelievably cheap. However, the amount of hardware that YouTube needs for it’s billions of videos might be next to nothing per unit, but still a huge amount for the billions of videos on their servers.
And the reason that YouTube can’t make money is because advertisers don’t want to be associated with the rubbish that Joe Blogs posts on YouTube. So YouTube has had to buy good quality video so that they can attract advertisers.
Gladwell also points out that although most people may want their information for free they will pay for the good stuff. This is impacting on newspapers where there seems to be little of value. However, the Wall Street Journal has over one million online subscribers for the good and relevant content on offer. Where’s the free in that.
As much as I agree with Seth Godin that it’s about grabbing attention, I also agree with Gradwell that the reason so much on the internet is free is because its rubbish or in the consumer’s mind not worth paying for. It’s also free because the consumer has no idea whether it’s worth paying for.
Facebook for instance isn’t worth any money, it’s purely offering convenience. You can share your information in other ways, maybe go back to old fashioned tools such as email. Facebook would not be able to introduce a subscription fee.
On the other hand Flikr has a small fee for a subscription service that extends your capacity to upload pics. Some people take that up, others don’t need to because they just don’t share that many photographs.
So what’s the answer to this question of free? Definitely there will be free. And definitely people will pay for what they see provides them with value. However, overall I don’t think we are heading into a Free only economy.
At some stage companies such as YouTube and Facebook will need to start making money. They will run out of venture capital donations. Secondly, the good stuff will rise to the top and people will be prepared to pay for it. That doesn’t mean that you don’t need to have some carrots dangling around such as bits of free goodies.
But I just can’t see there being a totally free economy. We’d all starve. People and companies will make their money in other ways. But however they do that, that won’t be free! And ideas as being free? Apple has charged a fair price, and for years, for their great design ideas….. Doesn’t it depend on what kind of ideas?