Free – Chris Anderson’s New Book and Why He is Right

Free – Chris Anderson’s New Book and Why He is Right
Chris Anderson during his presentation, The Ec...
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Chris Anderson’s new book Free has sparked a debate about the future of idea-based product pricing.  According to Anderson, products that are based primarily on ideas rather than “stuff” are going to trend toward being free as the new digital economy continues to develop.

I certainly agree with this – and you can see it already.  The open-source movement is a great example of this.  Just imagine how much money WordPress would be worth if it were privatized.  The amount of value packed into WordPress is incredible – but I can download it at no cost.  This doesn’t mean WordPress doesn’t make any money, however.  Rather than sell the product, they give it away for free, but offer to upgrade hosting for it for a charge.  The free product has allowed the open source community to help create a fantastic, popular product.  The quality of the product leads to people being willing to pay for easy hosting.  The ideas are free, but still profiltable.

Malcom Gladwell disagrees with Anderson’s analysis.  Gladwell asks questions like “Does he mean that the New York Times should be staffed by volunteers, like Meals on Wheels?” 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?” These questions reveal to me that Gladwell misunderstands the argument Anderson has laid forth.

Anderson isn’t arguing about what should happen.  He is using economics to explain what is happening.  The reality is that people actually do find value in creating and distributing products and ideas even when they aren’t receiving money for it.  This can be in the form of credibility, praise, or any other reason that doesn’t relate to money.  In the past, people that would be creating these intellectual-based products faced huge barriers in the form of fixed costs.  If I wanted to make and distribute a video 20 years ago, I would have to spend thousands of dollars on a camera, buy expensive editing equipment, and pay a lot of money to have the content distributed on either television or VHS.  The cost was so high, that most people that would like to make content couldn’t afford to.

At the beginning of this century, things changed quickly.  All of a sudden, digital cameras became very affordable.  Video editing software became widely available at a reasonable price.  Most importantly, distribution became easy and free online.  Now that the fixed costs were low, people decided to start creating content.  This is the downward pressure in the digitial economy.  Those that gain non-monetary value from content creation are no longer discouraged by large fixed costs.  Content is moving toward free.

I think Mark Cuban does a good job articulating the distinction between free content and freely distributed content.  Content is certainly moving toward becoming free – but that doesn’t mean free content has to be uncontrollable or provide no benefit to the creator of the content.  By changing the way we thinkabout content distribution, we can still maintain a mutually beneficial relationship between company and customer.

So what are the implications for web-based storytelling?  It is clear amatuer content is much more accessible now than ever before.  In a sense, we are all becoming storytellers – whether it is a video, a blog, or simply keeping our Facebook profiles updated, we are all telling stories online for free.  Many people feel the free nature of web-based storytelling will reduce the quality of stories being produced, but I disagree.  I think there will always be a place for professionally made content.  Right now much of that content is simply taken from TV or movies.  However, as companies get better at content distribution I think we’ll see more professional quality content come out.  We are already seeing it from, and I don’t see why we can’t see more of it.

So to sum things up – I agree with Anderson.  Things are moving toward free.  Honestly, unlike most people, I don’t feel bad for the newspaper industry.  Their model is dead, and I’m excited for what the new one will bring.

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