Chris Anderson May 5

FREE (Or: How I stopped worrying and learned to love $0.00) Chris Anderson, Wired

What is “free”? “ Liber” = freedom

“ Gratis” = zero price (contraction of gratiis "for thanks," hence "without recompense”)

“ Electricity too cheap to meter.”

What happens when things get free?

“ Waste is Good”

Alan Kay, Xerox PARC (1972)

“ Waste Transistors”

“ Waste Storage”

“ Waste Bandwidth”

Cost to stream a movie: $0.06

20 th Century: “ Atoms Economy ”

Things get more expensive

Free = direct subsidy

“ No such thing as a free lunch”

21 st Century: “ Bits Economy ”

Things get cheaper

Free = indirect subsidy

“ The best things in life are free”

Free #1: A marketing trick

Free #2: Ad supported

Free #3: Freemium

Options:

Time limited

Feature limited

Seat limited

Customer limited

Free #4: Gift economy

Econ 101(Bertrand)

“ In a competitive market price falls to the marginal cost”

Round down!

If the unitary cost of something is approaching zero, treat it as zero and sell something else.

People will pay to save time

People will pay to lower risk

People will pay for things they love

People will pay for status

People will pay if you make them (once they’re hooked)

Five Free Lessons From Games

Competing with Free: Microsoft 1970s:

Competing with Free 1980s:

If you can’t beat them, join them

Free’s hard: needs an upgrade path

But the trend line is clear

Whatever business you’re in, sooner or later you’re going to have to compete with free .

What’s your plan?

Chris Anderson May 5

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