Report on the book by Chris Anderson entitled FREE!

1. FREE
by Chris Anderson
HOW TODAY’S SMARTEST BUSINESSES
PROFIT BY GIVING SOMETHING FOR
NOTHING
REPORT BY IVAN LEE
TS STRAMA
AGSB

2. Free Things to Think About
 How some companies can give some products away
in order to increase the market for the products that
they charge for.
 The book is meant not to preach the gospel of Free!,
but to help readers find a path through an economic
reality that has been with us and gathering strength
for nearly a decade.
 Isn’t “Free” a socialist-communist idea?

3. Objectives
 What is FREE?
 Brief history of FREE as described by Chris
Anderson
 The Psychology behind FREE!
 How FREE! is possible
 Introduce Freeconomics.

4. What is FREE?
 20th Century free versus the 21st Century FREE!
 Atoms versus bits
 Nothing free versus everything [digital] is free
 Inflationary versus deflationary
 Etymology of FREE
 Latin: Liber and Gratis (freedom and thanks)
 Celtic: Freogan (beloved and friend)
 Free = too many meanings

5. The 4 types of FREE
 Direct Cross Subsidies (Marketing model)
 Three-Party Market (Ad supported free media)
 Freemium (Digital economics)
 Non-Monetary Markets (Gift economy)
*All shifts money from product to product / person to
person / now to later / monetary to non-monetary

6. The History of FREE!
 Free is nothing, nothing is Zephirus
 An economic system based on nothing?
 Barter Trade (Close knit groups)
 Collectivism – the “YOUNG” gift economy
 The Dunbar Number is 150 people max!
 Monetary Economy (Goodwill)
 19th Century – the birth of market economy
 Free reduced to a marketing gimmick
 Nation States (Progressive Taxes and Charity)
 20th Century transformative mediums
 Radio
 Corn
 Plastics – Is it really cheap?

7. The Psychology of FREE!
 Free is relative, never absolute
 Free as having to pay for something, even at minimal
 The Penny Gap = 0 and everything else
 Free as waste
 Free as a Time-Money option
 Pirates of the Digital World
 Free is really free

8. How Free is Possible
 Moore’s Law (Intel)
 Faster computing power
 Mead’s Law
 Advocated “wasting” computing power
 Technologist's job is to make technology cheap
 The cheapest delivery system possible: As price drops, there’s
advantage to treat them as if it was free...
 The Real Digital Age
 Everything that bits touch is also touched by its unique economic
proportion – cheaper, better, faster
 Information wants to be expensive and free at the same
time

9. How Free is Possible
 Google and the birth of a 21st Century economic
model
 Google: Free is the product philosophy
 Miracle of digital economics
 Data centers
 But why go free? The “MAX STRATEGY”
 The best way to reach the biggest possible market and achieve
critical mass
 Google understood its business well enough: Use free to
encourage people to spend more time online so that they can
make more money out of it

10. How Free is Possible
 If free is free, who makes all the money?
 Craiglist example: erased a $30B industry to generate $40M
 The eventual winners are the end consumers
 Compliments the capitalist idea (as opposed to socialist-
communist idea) – efficiency leads to better prices
 Redefining the market: from matching two people to a broader
sense of an ecosystem with many parties

11. Freeconomics
 The new media models for the digital age: Versioning
 Freemium is versioning where one is free and others are paid
 How big is the Free Economy?
 $300 Billion?
 Definitely hard to calculate...
 The Freeconomics
 Joseph Bertrand: “In a competitive market, price falls to the
marginal cost” = Free is inevitable
 The new monopoly: Network Effects where “monopolists” like
facebook do not have pricing power
 Every market is different – making money out of Free is a matter of
creative thinking and constant experimentation
 Freeconomics – money becomes secondary to attention economy
and reputation economy

12. So now you know...