Chris Anderson May 5

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Chris Anderson May 5

  1. 1. FREE (Or: How I stopped worrying and learned to love $0.00) Chris Anderson, Wired
  2. 2. What is “free”? “ Liber” = freedom
  3. 3. “ Gratis” = zero price (contraction of gratiis "for thanks," hence "without recompense”)
  4. 4. <ul><li>“ Electricity too cheap to meter.” </li></ul>
  5. 6. What happens when things get free?
  6. 7. <ul><li>“ Waste is Good” </li></ul>
  7. 8. Alan Kay, Xerox PARC (1972)
  8. 9. “ Waste Transistors”
  9. 11. “ Waste Storage”
  10. 12. “ Waste Bandwidth”
  11. 13. Cost to stream a movie: $0.06
  12. 14. <ul><li>20 th Century: “ Atoms Economy ” </li></ul><ul><ul><li>Things get more expensive </li></ul></ul><ul><ul><li>Free = direct subsidy </li></ul></ul><ul><li>“ No such thing as a free lunch” </li></ul><ul><li>21 st Century: “ Bits Economy ” </li></ul><ul><ul><li>Things get cheaper </li></ul></ul><ul><ul><li>Free = indirect subsidy </li></ul></ul><ul><li>“ The best things in life are free” </li></ul>
  13. 15. Free #1: A marketing trick
  14. 16. Free #2: Ad supported
  15. 17. Free #3: Freemium <ul><li>Options: </li></ul><ul><li>Time limited </li></ul><ul><li>Feature limited </li></ul><ul><li>Seat limited </li></ul><ul><li>Customer limited </li></ul>
  16. 18. Free #4: Gift economy
  17. 19. Econ 101(Bertrand) <ul><li>“ In a competitive market price falls to the marginal cost” </li></ul>
  18. 20. Round down! <ul><li>If the unitary cost of something is approaching zero, treat it as zero and sell something else. </li></ul>
  19. 21. <ul><li>People will pay to save time </li></ul><ul><li>People will pay to lower risk </li></ul><ul><li>People will pay for things they love </li></ul><ul><li>People will pay for status </li></ul><ul><li>People will pay if you make them (once they’re hooked) </li></ul>Five Free Lessons From Games
  20. 22. Competing with Free: Microsoft 1970s:
  21. 23. Competing with Free 1980s:
  22. 24. Competing with Free 1990s:
  23. 25. Competing with Free 2000s:
  24. 26. If you can’t beat them, join them
  25. 27. Free’s hard: needs an upgrade path
  26. 28. But the trend line is clear
  27. 29. <ul><li>Whatever business you’re in, sooner or later you’re going to have to compete with free . </li></ul><ul><li>What’s your plan? </li></ul>

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