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?
on Jul 4th, 2009 at 6:47 am
The priciple of supply and demand dictates the “value” of products and services.
Sometimes the value is intangible - ie delight, enjoyment on the part of the giver or supplier.
Sometimes the supplier is keen to test his product prior to sellling it - the value he derives is the verifcation and validation of his product and market exposure - both essential!
Maybe this “Free” phenomenon is transitory and may disappear or it may sustain itself for the reasons I presented above.
on Jul 4th, 2009 at 6:57 am
@Dawid
Good point. This Free thinking seems to transcendent supply and demand though. Somehow people seem to think if it’s online it should be free. The same attitude does not prevail in the offline world. Nobody would think of going into a shop and expecting anything for free.
on Jul 4th, 2009 at 7:50 am
It is obviously a long running topic for everybody from media houses , to tech industry players to online retailers and I think we have heard a lot of the arguments for and against free media.
My impression of what is happening at both the small and big media players is that the infatuation with the internet and “social media” is levelling out as marketers come back to the old age question of return on investment.
Having chatted to a couple of media and marketing strategists in South Africa it would appear that one of the media which is actually coming back into vogue in the business to business space is in fact old-fashioned radio.
Ditto for more tailored business to business events….
… Maybe expectations have been lowered on some of the online / internet / social media offerings which are free and value is again being placed on reaching a measurable (and visible) audience.
on Jul 4th, 2009 at 7:58 am
@Marc
Thanks for your great comment.
Agreed on Radio. I think that’s because Radio had it’s own shake up a while ago when it had to compete against so much other media it had to focus on what it could supply that nobody else could. And Radio has managed to re-invent itself.
Newspapers will need to rethink their own position as well. I don’t think it’s necessarily the end of print media. It just needs to be more relevant to its market.
It’s back to basics. The company has to find out what the consumer wants, rather than dictate what they think the consumer needs.
on Jul 5th, 2009 at 9:49 pm
I think there are a lot of people in the print media game going “Oh shock oh horror” and complaining that their titles are dying.
There have been a lot of marginal titles which have either “survived” or sprung up during the good times - I know I tried to launch one in the B2C and one in the B2B space at the tail end of 2007 which eventually folded.
The industry needs to consolidate now and those who can show either big numbers or direct access to a target market will be the ones that survive.
Back to basics in all industries!