Review of Free: The Future of a Radical Price by Chris Anderson
Free: The Future of a Radical Price
by Chris Anderson
At the beginning of Free, Chris Anderson presents a generalized dichotomy toward "Free." Some—mostly the older users—are suspicious of Free and insist they will have to pay somewhere down the line. Many younger users, on the other hand, think that Free, on the Internet at least, is a truism. Anderson says his goal is to convince us that neither camp has it completely right and that the truth lies somewhere in the middle.
This is an attitude that we can apply to the Internet in general. As newspapers and record labels have found, approaching the Internet like it's another form of print doesn't work. The rules are different, and in that respect, the Internet is a game-changer. Yet the difficulties the Internet presents us are not all new and unique to that medium, and this is not the first Free crisis in history. Indeed, the most important thing I learned from Free can be expressed as another truism: the more things change, the more they stay the same.
Let's level for a moment and crowd onto the same page (or pixel): this is popular economics. Anderson is a businessman, so he knows his economics, but he's chosen to distill it in an accessible way that isn't always rigorous, favouring the simple explanation over complicated economic theory. As someone who is intelligent about most things but stupid when it comes to economics, I'm glad he did that. Had he chosen otherwise, I would not have read this book. But if you're looking for a textbook on economic theory, you'll be disappointed. This book has no bibliography (which actually surprised me) and very few footnotes. That being said, Anderson treats his topic with the nuance and subtlety it deserves.
Free offers a granular analysis of exactly what types of Free economies you'll find, both offline and online. There's freemium, gift economies, cross-subsidies, etc. Sometimes it gets a little technical, but what matters is that Anderson is unambiguous in his division of the Free world; not all Free is created equal, and he shows us examples of each case. Moreover, he stresses that the idea of Free as a marketing tactic is far from new.
What the Internet changes about Free is that it drives marginal costs for the producer to zero. Microprocessor production has become so efficient that microchips are essentially "too cheap to meter," as Anderson puts it, which means that bits, unlike atoms, are in abundant supply. In the physical world, Anderson has to make tough decisions about which articles get the finite and valuable page space in Wired. Online, he can allocate as much space as his content creators need. That is the almost science fictional difference provided by the Internet, and if you wrap your head around this key point, you're well on your way to understanding Free.
The paradigm case for Free online services is, of course, Google. Anderson spends a lot of time discussing Google (although not as much as one might think), and he also looks at how other companies have used Free to compete with Google. In particular, he presented a brief case study on how Yahoo! prepared for the competition of Gmail in 2004 by introducing unlimited email storage (as compared to Gmail's 1 GB and increasing email storage). I liked this example, because it belies the critics of Free who claim that it will somehow eradicate capitalism and no one will make money any more. Google's profits show that those who embrace Free instead of viewing it as a threat can still be successful.
Free's value to the average reader comes in the connections it makes between practice and business. I know that Google gave away most of its services for free because it made money off ads. I also know that Google collects an amazing amount of data about people, companies, and websites as we browse the Web. Yet I didn't consciously connect these two and realize that one reason Google makes its services free is to facilitate data collection. It sounds sinister (and certainly has that potential), but it's also brilliant. Anderson's example is Google's 411 service, which was free of charge. Google didn't stand to make much money from that service if it did charge; by giving it away for free, it acquired voice data for use in its voice search and recognition algorithms. For businesses, this is another example of how Free can be better in the long-term. For readers, it raises awareness of the motives a company has behind its offerings of Free. In both cases, the message is the same: Free can sometimes be the most beneficial path for a company to pursue.
From Gillette to Jell-O, Anderson has enough anecdotes of companies creating successful products (or in some cases, entirely new markets) with a Free strategy. Aside from showing that Free works, these examples are valuable because they considerably pre-date the Internet, and they demonstrate that the phantom of Free has lingered over our economy for a long time.
Newspapers decry the availability of free news online; music labels complain about piracy. We're seeing pressure on governments to regulate and legislate these companies back into profitable business models. This is somewhat ironic, since if these companies really believed in a free market (small F, note), they should be changing those models, not asking for a rule change. It's important to recall, however, that this situation is not new. Lawrence Lessig points this out in Remix, and Anderson reiterates it in Free. New technology has always presented challenges to incumbent businesses:
Radio Broadcast magazine announced a contest for the best answer to the question "Who is to pay for broadcasting and how?" . . . The winning entry sought a tax on vacuum tubes as an "index of broadcast consumption." . . . There were some suggestions that advertising might be the answer, but it was by far from a popular solution. It seemed a shame to despoil this new medium with sponsored messages.
Does that sound familiar? "Who is to pay for music downloads and how?" "Who is to pay for ebooks and how?" The technology and the content might have changed, but the question remains the same: who's going to pay? Radio did find a solution—advertising—but then when it became viable to play recorded music over the radio, this triggered another crisis in revenue for recording artists. So the cycle began again.
We found solutions to those crises. So why are people so doubtful that we'll find solutions to the current crisis? Maybe I'm just not being empathetic enough for the poor newspapers and recording labels. Yet I can't help but think that trying to legislate a way toward a static situation in the face of changing technology is a losing endeavour. Best to adapt now, get ahead of the curve, and be the trend-setter.
So in case you can't tell, I liked Free. It was accessible, but not over-bearing, in its analysis of the Free economies. Although "Free" may be a radical price, this is not a radical book; it offers sound advice that can probably be repackaged as common sense. Even if you aren't planning to start your own business any time soon, I would still recommend this book to you, for the simple reason that it raises awareness of how companies use Free to make money. And when companies make money, the older generation is right: someone pays, somewhere. But the Internet has changed that too, because more than ever, consumers interact with companies on a very personal level. So it behoves you to know where the money's going (and whence it comes). Read Free, be savvy.