Freeconomics: Gladwell, Godin and Anderson on Free

Freeconomics 101

Freeconomics 101

Business models and the survival of entire industries are the stuff great debates are made of, and we’ve got one brewing here. Chris Anderson, Wired Magazine editor and author of The Long Tail, has a new book out, called Free, the future of a radical price. He puts forth arguments that look pretty compelling to anyone who has followed the demise of printed publications – both magazines and newspapers. You can check out his Wired story on this from Feb. 2008 here

You can listen to Chris Anderson on an Amazon Podcast here and buy his book, Free, from Amazon through the link below right.

But wait just a second, says Malcom Gladwell, celebrity author/intellectual, in his review of Anderson’s book in The New Yorker. And just as you would expect, Gladwell is able to deftly parry many of Anderson’s assertions, leaving us to wonder who is the better predictor of the future (ReadWriteWeb also challenged Anderson’s assertions back in Feb. ’08).  So, with King Kong and Godzilla thus facing off, here comes, well, here comes that scary monster from Cloverfield in the form of Seth Godin to shift the balance in the direction of… Chris Anderson. 

Godin believes, as does Anderson, that “free” is such a compelling paradigm shift that it is simply is too big to withstand. And I can’t say I disagree with him. And yet, Gladwell’s logic – that while the content may be free, the infrastructure to support it may not be. Gladwell also makes winning arguments when you move beyond the “idea” industries and look at pharma or energy. 

I think technology, upon which just about everthing now lies, has had a profound effect not necessarily in driving down prices to the point that they are free, but in creating a marketplace that allows for a wide range of pricing options, everything from free to exorbinant.  There are just too many factors to say that free is the irresistable force Anderson claims it to be.  We’ve reached an inflection point, or perhaps a singularity on the horizon line where all options are now equally possible. Where the paid subscription models like The Wall St. Journal can co-exist with The Huffington Post.

And it’s not just business models, take a look at pop music. Where once Rock & Roll was a response to big band, a punk was a reaction to disco (or was it vice-versa?), and grunge to boy bands… now, a musician like Girl Talk mashes them all up in one song – and offers the album on a “pay what you like” model to boot! It’s no longer possible for a genre to emerge in reaction to the bloated corporate sound before it because the reference points have folded in on themselves. Hugh MacLeod ruminates on the subject a bit here.

So, how do you decide on a business model (or sound for your band) when all possibilities are, well, possible? I think there are two keys:

1. Know your audience

You better have a very good understanding of your audience before you go to market. What’s their threshold and what other options do they have to receive a good or service that competes with yours. Until you can answer questions like that, pricing will be a guessing game.

2. Know your product

If you think your product is your music, or your written words, then the current market forces are working against you. There’s too much freely available music and other content out there that can be digitized and shared.  Yes, there’s a market for paid content at the highest level, but you’re not Radiohead or Malcolm Gladwell, are you?  But that’s ok because people are willing to pay for an experience. I’m guessing Seth Godin can make more from live speaking engagements than he can from his books.

Free isn’t always the answer, but understanding the dynamics and how free changes them is essential, regardless of your business model.