Chris Anderson, the author of The Long Tail and editor-in-chief of Wired Magazine, has moved his focus to "Free". His article is the cover story of the latest Wired (Free! Why $0.00 Is the Future of Business) and has a book coming out in 2009. I think he's onto something.
A couple of quotes:
Once a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of other bands on MySpace that grasped the audience-building merits of zero.
Technology is giving companies greater flexibility in how broadly they can define their markets, allowing them more freedom to give away products or services to one set of customers while selling to another set.
I encourage you to read the article - I think it's a meme that will be around for a while. For now though, I want to talk a bit about how "Free" has impacted Common Craft...
Being a small company, we need to keep costs down, and the free economy has been a huge help.
Bandwidth: We pay zero bandwidth costs to serve our videos online. The bandwidth is paid for by the hosts, namely Blip.tv and YouTube (though we are "pro" members of blip). These costs could be considerable for a small shop like us.
Web hosting: Our web site is essentially free to us thanks to the fine folks at RainCity Studios. It's a sponsor/partner arrangement that's good for both of us.
Marketing: We spend little, if anything on traditional marketing. The good people of the web have been better marketers than we could have imagined. Plus, blog posts are always free. The marketing cost comes in terms of our time.
Communication/Collaboration: We're heavy users of Google's free business services, like Google Docs, Gmail, etc. (collectively known as Google Apps.) And of course, there's the Twitters, Facebooks, LinkedIns, etc.
At the same time, we've oriented our business around freeness.
Let's pretend that we started making videos like RSS in Plain English with the purpose of making money from them directly, perhaps by charging for access. Here's what wouldn't have happened:
- We wouldn't have put the videos on You Tube, Blip.tv, etc.
- The videos would have never been spread across the Web via bloggers.
- We would not have a popular blog or videos with lots of views.
- There would not be demand for our custom services
- We would not have worked for Google, H&R Block, Redfin, etc.
- We wouldn't have a recognizable brand.
- We would not be so happy right now
Sure, we may have made some money in the short term, but we'd also be toiling in obscurity for a lot longer. Here is what this has taught us:
Make something useful, brand it, and give it away for free. Encourage others to share it and make it easy for them to do so.
Look for markets that will be happy to pay for a custom or specialized version of the free item. Make sure your free products appeal to these markets.
Be open and friendly. Talk to people who ask about sharing your free items. What do they want? What do they need? What would help them? Look for opportunities to build paying models around these needs.
Look for tiers of freeness. Consider creating free versions and pay versions, with the pay versions offering higher quality, ease of use, special access, etc.
Look for ways to collaborate with other organizations for free. Trade time, brand, information or whatever makes a win-win for the parties involved.
The bottom line is that there is approximately zero possibility that Common Craft could have been successful without the free economy. I'm with Chris, the future of business is free.