Book Review: “Free: The Future of a Radical Price” by Chris Anderson

It’s hard to imagine for old timer like me to think a free product can be any good. If it’s any good, why would anyone give it away for free? Well, the new electronic media have near-zero marginal cost. Therefore, giving away these free are not too costly, thus the dawn of the new “free” economy.

The author, Chris Anderson who also wrote “The Long Tail,” gave a pretty convincing set of arguments that the new “abundant world,” as opposed to the “scarce world” we were more familiar with in the 20th century, presents a new set of challenge to producers of “contents” or “IP (intellectual property)” to derive value and thus charging the users for money. The new generation, especially those from China, are not going to pay for contents because they can easily transported in “bits” over the internet and they have more time than money, but they’re willing to pay for something physical (“atoms”) or experience (like a concert). Giving away free music, contents are the new way to maximize the reach to the maximum number of audience. The best you can do is probably to charge 5~10% of the audience for the “premium” versions, because they have more money than time. Another way is have ads subsidize the cost but this is getting increasing difficult as ads are not as effective. (Google ads remains the king of ads because it’s directly related to people’s interest at the time of the search.) The other way is to give away the first one free and charge the follow-on products once the large audience base has been built up.

Though the book is a bit long and repetitive but it’s worth listening to on audio. It teaches you how to make money off “free” goods in this new world of “abundance.” This is a scary time for most knowledge workers as a lot of our results and efforts can be easily moved from one place to all over the world through Internet very quickly and “freely.” We need to learn to adjust to the new pricing model and take advantage of it. Living with “abundance” can be hard.