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February 25, 2008

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ivankirigin

Excellent piece.

Some quick questions about the Wired print magazine:

How much would you have to sell an Ad-free version to cover costs?
How many more Ads would you have to include to start giving it away for free, including shipping?

I'd pay for the former, and I think lots of people would gladly pay zero for the latter.

Nathan Gilliatt

Just wondering... What's the cover price of the free issue of Wired?

Glenn Fleishman

Do you deal with the idea of marginal cost to the individual as "free"? I wrote an item on my Wi-Fi Networking News site about how the new AT&T/Starbucks deal fulfills something I've been saying for years: Unlimited public access Wi-Fi would be "free," but either it would actually cost nothing (two hours per day for exceedingly nominal purchase at Starbucks, lots of free cafes in the world, free airports, etc.) or cost a nominal value of about $20 per month to an individual to whom $20 per month was essentially "free" relative to use and value. Or, that their business was picking up, so it was free to the individual to have Wi-Fi throughout their work and personal life.

Ditto, when you get T-Mobile offering $10 per month unlimited domestic calls with all the trappings of Caller ID, voicemail, etc., thrown in, that's not free, but it's approaching free, especially relative to the high cost of service.

I guess it's a "as cost approaches zero" as opposed to "cost is zero."

Kris

I think there could be one possible threat to this concept: soaring energy prices.

Bandwith and storage are cheap, also because energy is cheap (it still is now: compare the price of a litre of oil with the price of a litre of milk or beer).

The internet infrastructure and the datacentres run on electricity, no? If energy prices soar, they will have to raise their prices too.

At the end of the article, you mention the promises of Lewis Strauss, head of the Atomic Energy Commission: that we were entering an age when electricity would be "too cheap to meter." It think it's weird following the example of someone who got it wrong.

cjagers

I actually walked out of the bookstore with the magazine, thinking it was free! Alarms went off. Very funny. I am still looking for how a start-up can engage the philosophy of freeness (when they have no resources). I am looking forward to the book!

Noah W. Smith

I too wonder how long it will be until WIRED is free...

Will Prestes

Unfortunately, the FREE Wired form does not accept British post codes.

:(

Bug!

Badger Gravling

The idea of getting an issue of Wired free was looking good. Especially when I could select the right country from the drop down. And then I read the small print:


"You must be a legal resident of one of the 50 United States or the District of Columbia and at least 18 years of age as of the date of entry."

On a brighter note, and on the concept of free, there are some stunningly good free PDF mags on issuu, including one I have a vested interest in, Disposable Media (also at www.disposablemedia.co.uk)

John

There is indeed no such thing as free. Doesn't accept non-US applicants. Neat global view Mr Anderson. Maybe a book on the anachronistic world of print publishing?

Shahar

Just finished reading your excellent piece, and waiting for future posts as well as for the book.
Once more I'm a bit puzzled by what I can only think of as lack of moral judgment caused by covering such an exciting shift. As more people now start talking about banning the Olympics due to China's violations of human rights and its involvement in atrocities you simply thank China for the prices of T-shirts dropping without any hint of criticism.
Also, caught you cheating, twice:
1. Using interatomic repulsion to escape Zeno's paradox is a cheat, nobody ever said there's a wall at the other end after all (OK, I guess you never meant this to be an actual solution but some readers might be tempted to think of it as one).
2. Processing power is not, and will not be for the foreseeable future free. This is why, for example RSA encryption still works. This is why computers used for academic and R&D purposes are still rationed and why many of them still adhere to command line OSes. I, for example am analyzing a rather simple 1-dimensional model governed by a straightforward set of equations. The only problem with it is the minor fact that it is infinite in length. So I have to approximate it by a sequence of finite approximants and study them for convergence. But even those finite approximants grow exponentially. I have been studying those models for quite a few years now, and my computation power has grown considerably, this made me able to move two steps forward in my approximation, far from being satisfactory. What is true is that in some cases heavy processing can be carried in advance (Google's indexing) so the end user gets the impression that processing is fast, easy and FREE. Why do I bother with this distinction? Because when someone of your status claims processing power to be free people listen, and that leads to complete miscomprehension of the tasks faced by scientists and programmers.

james

great article chris. i read it on the marta bus this morning. which reminds me, wonder if someone could come up with a business model to make public transportation free?

maybe we need a term for giving away things that are good for the environment - some combination of free and green?

Paul do Forno

Excellent piece....

Even Microsoft is getting into the Free business... are you going to research into their moves?

BTW... I signed up for the free magazine then I saw in the magazine store and bought it anyways! I wanted to read it then on the plane I was getting on... Even though I knew I could get it free.

Lee Aase

GREAT article. I've been following the progress of this book on your blog since you started talking about it. I'm sure you've got the free inkjet printer/expensive cartridges covered, right?

Are you still looking at finding ways to make the book free when it's published next year?

noel hidalgo

hot damn! wonderful piece my friend. you've truly crystalized the business abstract of a journey i've just completed. it was an around the world trip predicated on free culture and open source values.

i look forward to your musings and hopefully a conversation or two...
http://luckofseven.com/day_230_reintroduction_luck_seven

John Dumbrille

Chris, This is more great stuff from you. Thanks.

I think youll agree that everyone's interest in the subject isn't just predicated by "where's the money?" Though seeing Facebook create more value than Ford in a very short time makes an interesting spectator sport.

I think Google has succeeded because it delivers a type of democratized access we expect from the marketplace. Social web enthusiasts take freedom to connect to be a self evident right; companies like Google succeed because they find ways to deliver on this driver.

OK I do have a question. Do you think it's fair to say that free is generally = "subsidized?" Subsidized by people who want bells and whistles, subsidized by non students, subsidized by advertisers, or by people who buy market research. That is, 'free' as a new variant of subsidized social infrastructure.

Chris Anderson

@John: Yes, I do think that most FREE models outside of the Gift Economy do boil down to a cross subsidy of one sort or another.

Nathan Cravens

Great article Chris, I hope the upcoming book is going well. From what I can tell, you seem to be the most prominent speaker on post-scarcity economics. Your writing thus far has been rather careful, as I'm sure it's in your interest to do so.

Given your background, I'm certain you are aware of the broader implications of your work. The one where a 1% rule in business becomes a 0% rule of non-business. I offer a working template in discussing this sort of abundant economy in the working essay, Towards an Effortless Economy. (effortlesseconomy.com)

Your current work I find exciting and going somewhere. I became aware of your book sometime last year, but it didn't seem to apply to a post-scarcity environment, so I overlooked it and your blog. Now, I look forward to divulging your book, The Long Tail, and particularly your upcoming book on "freeconomics."

I look forward to discussing abundance with you and anyone else who may be interested in the upcoming free future.

JS

You've been challenged! http://www.centernetworks.com/wired-free-is-not-future

Ed Brenegar

Would you post your video to YouTube, so that we can freely embed it on our blogs? It is a nice intro to the idea.

Dr. D

The marginal cost of printing one more copy of the New York Times, or the WSJ, or any other newspaper is approximately zero (to the same precision as the marginal cost of web page impressions are zero).

Newspapers have in the past (and some in the present -- AM New York comes to mind) tried the free model, yet they generally revert to a pay-per-copy model, even if the payment is a token payment (eg: NY Post at 0.25). Hmmmmm.

So much for "simple economic theory".

All sorts of magical thinking become possible when you assume that close to zero really is zero, and when you assume that the symptom is the relevant feature!

Just like with the Long Tail, the bricks and mortar world has been here, done this, and incorporated the lessons. When will the web world and associated pundrity get with the program?!

edgar Gonzalez

chris have you seen this
is an amazin graph of the NYT that might find it a bit more on the long tail but I tough you will like it

http://www.edgargonzalez.com/2008/02/28/the-ebb-and-flow-of-movies/

original link
http://www.nytimes.com/interactive/2008/02/23/movies/20080223_REVENUE_GRAPHIC.html#

Sandy Ward

Just finished reading the article; I got a 'free version' of the magazine because a friend loaned me a copy. This is a great example of making something 'free' to increase a persons reputation.

Chris, I hope you come to Toronto, Canada to give a talk in the near future!

Alec Bemis

I thought the article was excellent, but I have a critique of your thoughts on "free" in regards to how it might apply to the music market:

http://blogs.laweekly.com/play/teenage-kicks/chris-anderson-wired-explain-t/

For some reason record labels make such a natural bad guy it's perhaps too tempting to remove them from the equation entirely when thinking of how media might be bought, sold, or given away in the future.

-Alec

Irene Grumman

After you spoke of Alan Kay and Dynabook:
"The purpose of this profligate eye candy? Ease of use for regular folks, including children. Kay's work on the graphical user interface became the inspiration for the Xerox Alto, and then the Apple Macintosh, which changed the world by opening computing to the rest of us. (We, in turn, found no shortage of things to do with it; tellingly, organizing recipes was not high on this list."

We found things to do with it...Instant mantra or proverb here. In the macrocosm of my own involvement, I've researched genealogy, followed your blog, watched episodes of "Life." I've emailed and gmailed with a wider acquaintance and distant relatives. I've watched inspiring talks on www.ted.com (and if you're not already doing that, please do!). I've followed the progress of a baby panda, learned to edit digital photos, bought and sold things online. I refill my prescriptions and read my medical test results online. I bank online. I was about 60 years old when I branched out from the Word Processor usage, which I still love for writing stories and essays. I read at least 20 print books a month along with a few print magazines, notably WIRED, and have a newspaper subscription. If I lost the Internet, it would be equivalent to losing my hearing, or the use of a limb.

Even 10 years ago, I could not have imagined what I would find to do with computing. What's next?

Free public libraries made so much of my education possible. That's the closest big idea for free that I know.

A greater part of my income can go into the consumer economy because other things are free to me.

Thomas Schinabeck

One sentence in the story at first made me smile...

"Now you can get a t-shirt for less than the price of a cup of coffee, (...)".

but then I realised Chris mentions here subconscious a way how you can compete with the "age of free". Is coffee free? Well, the production of a cup of coffee is nearly as "free" as the huge data center of google is "free"... But the price of a cup of coffee can get so high cause of great customer experience, service and a great brand. The same for the example "bottled water". So people will still pay for products even if there is a free alternative. They pay for added value, but not for the reason of "scarcity". In the digital age there is no "scarcity" of content and information.

Dr. D

Thomas,
Sorry, but it's still about scarcity; always has been, always will be. The difference now is that it's about managing artificial scarcity.

Cost of duplication, in labor and/or raw materials, has always been a red herring -- economists have always known this, but Stallman (who seems to me the originator of all these modern thoughts in the technosphere) was totally misguided to focus on this aspect. While cost of duplication sets a floor on the minimum revenue per copy, it in no way determines a floor on selling price, etc.

So the fact that duplication in a digital world is near free is irrelevant; there are myriad good examples of near free duplication (marginal cost) in the physical world as well -- newspapers, coffee (as mentioned in this thread), mass transit (photo in Wired article), etc. None of these are routinely free, for lots of good reasons none of which have to do with the marginal cost of production.

In fact, in a broader sense, the physical world has been moving in recent years to *increase* the cost of IP: consider the price difference between a Chevy Tahoe vs a Caddilac Escalade -- the Escalade is only slightly more costly to produce on a marginal basis, yet costs nearly twice as much as the Tahoe!

It is alternately painful and entertaining to watch as the technosphere re-learns all of these basic economic and management concepts, as if somehow they are a new First People. But I suppose all generations go through this....

Nicole Martinelli

You've probably already run across this but the trendwatchers just jumped on the Free bandwagon (giving you a mention) & sexing up the concept:

FREE LOVE: the ongoing rise of free, valuable stuff that's available to consumers online and offline. From AirAsia tickets to Wikipedia, and from diapers to music.

FREE LOVE thrives on an all-out war for consumers' ever-scarcer attention and the resulting new business models and marketing techniques, but also benefits from the ever-decreasing costs of producing physical goods, the post-scarcity dynamics of the online world the many C2C marketplaces enabling consumers to swap instead of spend, and an emerging recycling culture.

Expect FREE LOVE to become an integral if not essential part of doing business.


http://www.trendwatching.com/trends/freelove.htm

Jeanne Meister

Chris
Great article--I created a post on my blog--www.newlearningplaybook.com targeted to chief learning officers at FORTUNE 1000 firms asking the question: what will be the impact of FREE on $1 million custom executive education courses now being funded at corporations?

Robert

Nice article.....!

David Zetland

Idea for FREE: Public transportation is often priced at average cost or some positive cost, yet the busses, trams, etc are not full. Given the marginal cost of an additional passenger is zero, the price should be lowered to zero (free!). If/when routes are full (eg, rush hour), prices can rise to choke off demand/control congestion. Please contact me if you want more on this topic. (I'm an economist; knew about Long Tail; heard you on Bloomberg.)

Gary

I started to say, what about the premise that what is received as free is not ‘valued’ as much as it would if someone had to pay for it, or extend some fair amount of effort to obtain it? (I’m still mulling this over)

Then I thought, well what about a rolling snowball? The Internet started as a little one....slowly rolling and free. Then it got bigger, and as snowballs go, the momentum increased, it got bigger..and bigger, yet was still free. It created a whole new economy, new industries all sorts of "value added" to 'people'. After all it is people that look, taste, touch and smell, and sometimes we listen. If you can attract us with something that touches one or more of the former, then you have potential.

Okay, back to the snowball. Who created the Internet, and what was it for; I think most know this history? So, why not roll up another snowball, give it a gentle push, let it go and see what happens? Life is like that anyway, we'd like to think we are in control, but the only control we really have is in our ideas, not in an automatic sense, but more inspirational, that is its food. So, if we don’t have to worry about our source of inspiration, and if its readily available, then the ideas flow. Which in turn makes the snowball bigger, and it got bigger collectively. I started in a one gas station town and packed my bags to share what I made with the rest of the community, city, state and on and on.

So, where is the money, good question, where is the money? I think you’re in the midst of a re-distribution (so to speak) phase of the traditional economy. Obviously, or based upon current economic conditions, it seems bleak, from a business standpoint. Is it from a consumer one? I'm on the fence with this still. Perhaps, as Chris implies/conveys, until or IF we approach each other in areas that 'we' have an interest in (community centric focus) we can now more narrowly roll our own snowball.

I think, Chris, you may want to look at virtual worlds as a way to give life to this model. With a push, or a 'type' of snowball that has more energy potential, and the momentum builds sooner. After all, hasn't the Internet given time MORE meaning, even if it’s relative? Has it not made a mockery of what we have known time to be (slow)? I believe, with virtual worlds, you now make the world your home and can relate “directly” with people from all over the world. So, your one or two members focused community group, just found a place to meet, and with others of like kind, which was never before possible. Moreover, time now becomes even more of blur...perhaps Einstein was right?

What about "free", why not?

btw Chris, great interview!

Michael Bergman

Great article.

I definitely believe that Free helps in the long run - my company has been focused on merging "free" products (helpful handbooks for kids going to and graduating from college) with non-profit/educational endeavors.

The demographic of high school and college students was built on services and products being free - so we've attempted to serve this mindset by finding helpful organizations to give away our books - as you can see with the Graduate Survival Guide - http://gradsurvival.com/get_book.php . The fact is that technology is slowly moving everyone into a free mindset, so, I believe, it's up to companies to figure out how to satisfy that free mindset to get their products/ideas out there.

franko

What an interesting way to get people interested in reading! Book trailers are like movie trailers, but for books! You can find them all over the internet now, but here is a site that's featuring them on YouTube. http://www.youtube.com/booktrailers

Peter Kohan

Chris,

I'm sure you've probably seen this, but I think this another perfect illustration of FREE in action: http://www.nytimes.com/2008/03/17/business/media/17mags.html?ex=1363406400&en=c88fad50b8c052bc&ei=5088&partner=rssnyt&emc=rss

The Sports Illustrated archives for free - pretty good stuff.

ishfaq

think there could be one possible threat to this concept: soaring energy prices.
Muhammad ishfaq
---------------


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Richard

I've seen your list of "Free" business models here and elsewhere and I always wonder why you never include free content distribution based soley on donation income? Seems to work for WikiMedia - http://wikimediafoundation.org/wiki/Home - Wikipedia is sorta big :)

iddaa

Great article Chris, I hope the upcoming book is going well. From what I can tell, you seem to be the most prominent speaker on post-scarcity economics

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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

FREE was available in all digital forms--ebook, web book, and audiobook--for free shortly after the hardcover was published on July 7th. The ebook and web book were free for a limited time and limited to certain geographic regions as determined by each national publisher; the unabridged MP3 audiobook (get zip file here) will remain free forever, available in all regions.

Order the hardcover now!