Free for a Fee

Whether you are a producer or a consumer of media content or both, you cannot afford to not read Free: The Future of a Radical Price by Chris Anderson. The editor of Wired and author of The Long Tail: Why the Future of Business is Selling Less of More, Anderson has his finger on the pulse of creativity and commerce like few others.

As Anderson writes, “The new form of Free is based on the economics of bits, not atoms. It is a unique quality of the digital age that once something becomes [digitized], it inevitably becomes free—in cost, certainly, and often in price. And it’s creating a multibillion dollar economy—the first in history—where the primary price is zero.”

“The rise of ‘freeconomics’ is being driven by the underlying technologies of the digital age. Just as Moore’s Law dictates that a unit of computer processing power halves in price every two years, the price of bandwidth and storage is dropping even faster. What the Internet does is combine all three, compounding the price declines with a triple play of technology: processors, bandwidth, and storage,” Anderson continues.

Anderson is quick to point out the difference between free as in “freedom” (libre) and free as in “price-less” (gratis), i.e. free speech versus free lunch. Of the types of free (gratis) models, perhaps the most familiar one to readers is the “freemium” model, which is free to basic users and offers a premium paid version (think Flickr and Flickr Pro). The key to freemium is the Five Percent Rule: five percent of online users support all the rest.

To clarify an often-misquoted axiom, Anderson writes, “Commodity information (everybody gets the same version) wants to be free. Customized information (you get something unique and meaningful to you) wants to be expensive.” In other words, as long as there is a fee associated with its creation, information needs to be subsidized somehow.