Free: The future of a radical price

Monday, January 18, 2010

This book seems to have been one of the best sellers of 2009. Chris Anderson is known for many reasons. He is editor at Wired but also the person who launched the famous concept of “the long tail”. Today, I am not sure that the long tail made anybody rich. Some recent studies from Harvard seemed to contradict this theory.

Nevertheless, reading this new book was mandatory for me. One of the popular beliefs is that Internet is free. It is often claimed that DRM is useless because Free is the future of media (or at least supported by some means).

The book clearly shows that there is no free lunch and it describes the economical mechanisms behind “Free”. Anderson provides an interesting taxonomy of the different forms of cross subsidies. Then, he illustrates them.

For instance, why is interesting for Google to promote the free use of online activities on almost everything? It allows to better profile the users and better place advertisements.

Every click in Google Maps is more information about consumer behaviour, and every mail in Gmail is a clue to our human network of connections, all of which Google can use to help invent new products or just sell ads better

The explanation of the attraction of free by human factors is great. According to him, people are wired to understand scarcity better than abundance. Because we are afraid of loss, free is attractive. We do not take any perceptible risk.

He also explains why Internet will be free:

TV is a scarcity business (there are only so many channels), but the Web is not. You can’t change scarcity prices in an abundant market, nor do you need to, since the costs are lower too.

Now, does he present solutions? The examples of audio seem promising. Nevertheless, I have many doubts about the portability to video market. Would ads be able to support a movie such as “Avatar” whose cost exceeded $300M?

Nevertheless, this book is mandatory to read if you want to better understand some of the big waves of the Internet and the entertainment world. This may help you to build your own opinion.

Do you believe that the Future is Free?

Refence: Anderson C., Free: the future of radical price, Hyperion, 2009

Oh, by the way, you can download the book for free and legally!

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