One thing’s for sure, people are passionate about free stuff. Free opens up availability to anyone, but also can devalue the product. In preparation of Chris Anderson’s new book “Free: the Future of a Radical Price” I’ve taken a moment to review some of the commentary regarding this controversial idea. Anderson feels certain that a “downward pressure on prices represents an iron law of the digital economy.” According to him, “give a product away, and it can go viral. Charge a single cent for it and you’re in an entirely different business. . . . The truth is that zero is one market and any other price is another.”
There’s a trend that with advancement and exposure things get cheaper; then consumers expect this cost to continue declining or never raise. An example that contradicts this downward trend is Malcolm Gladwell’s response to Anderson’s book. He argues not all people expect things to get cheaper, the quality of the product makes people open their wallets. Today with anyone being a content producer, the difference between mediocre and good content is huge. For example, consumers are happy with catching their favorite show online for free, but alternatively feel okay paying a premium for ‘better’ content on HBO. It’s true what Malcolm implies: the only thing that’s certain is uncertainty.
I agree with Anderson that free generates a unique type of demand and we’re trending on a “downward pressure of prices,” although there is still a place for fee based subscription services alongside their free alternatives. If the trend of free continues, what value can we place on items to tell them apart? Typically a high price tag insinuates better quality, and without some type of price the content publisher’s brand recognition will determine the value. The content creation bubble has popped allowing many other contributors to enter this space, this causes a drastic change in the type of content available. Regarding Malcom’s argument about people paying for specialized content, Seth Godin enters the conversation by saying it’s not just specialized content, it’s uniquely specialized content that people will pay for.
Anderson remarks about the changing state of business models; with content being free, businesses need to find away to still make money. But how does this conversation of free impact web-based storytelling? First, this conversation is being heard by content creators, making them aware they might not make a cent. This could have a honest and profound affect on the content they produce. Motivation through money is quite strong, but motivation for peer acceptance seems to be increasingly more important.
Mark Cuban also looks at this discussion and says “what we are experiencing right now is “Better Than Free,” but what does he mean by this? According to Mark, items we’ve paid for in the past, like the newspaper or TV, but now get for free fall in this category. This helps define who content creators are; people looking to get paid the big bucks are passed over because of changing business models. Cuban notes, “you take on the role of identifying the best in breed for your business and use your resources to help those talented people figure out how to make money for themselves and for you.”
So, is Anderson right thinking that giving things away for free will make companies more profitable? I think so, but only if there’s a hard look at business models, the importance of brand identity and peer recognition, as well an understanding that content given away in a fashion that maximizes revenue and exposure is best, and not just “being distributed Freely” as Cuban says.