Chris Anderson: The Future of ‘Free’
Tuesday, June 19th, 2007
The Long Tail author and Wired editor Chris Anderson previewed his next book project — titled “FREE” — set for 2009 release.
Anderson announced the project last month at Book Expo America in New York and this morning delivered an expanded outline of the concept during a keynote at O’Reilly’s Tools of Change conference at the Fairmont in San Jose.
Moore’s Law essentially boils down to zero, Anderson began. As underlying costs and technologies (storage, bandwidth, in some sense manufacturing, and complexity i.e. 3D) trend towards zero, why not act as if they are zero?
Anderson described three historical “free” models:
- “free” — as in Skype and YouTube. He noted Yahoo! Mail’s latest offering of infinite storage space as recognition that the cost of storage is falling faster than Yahoo! believes the average user can use it.
- “free samples” — like Ben & Jerry’s or Gillette giving away a free razor with purchase of a set of blades
- “gift economy” — i.e. wikipedia, craigslist. People are willing to donate time, services, expertise, and knowledge in exchange for non-monetary assets.
These assets -– attention, expression, fun, reputation — are integral to the community provided by these services. the growth of these services underlines the power of an “economy of free.”
This model as it applies to the world of media can be traced back to early 20th century broadcast.
The cost of reaching “n+1″ consumers via radio and television broadcast is marginal. In other words, the cost of adding additional consumers is zero. One broadcast tower can serve one or one million at the same cost.
This free distribution model was a fundamentally changed culture, Anderson said; suddenly it was all about maximizing audience (and further, pushing culture onto the masses). This led to the rise of the ad-driven business model popular today. Selling the audience to the advertiser, charging an arbitrary price to get the most eyeballs on the most copies.
Personally, I think the arbitrary price notion conflicts with the “free” concept and as consumers grow more and more accustomed to associating “free” with “better” (or at least bragging rights), the notion of charging $9.95 for a magazine subscription directly conflicts with Anderson’s initial idea of anticipating Moore’s law to the cost of zero.
But ten bucks, said Anderson, is enough to qualify the reader as interested and is not so cheap as to “devalue the product” in the mind of the reader. Even charging one cent would at least indicate to the advertiser that an effort was made to entice the customer, thus incentivizing the cross-subsidization model in which the ads pay for bulk of the publisher’s costs.
Sell the experience, give away the product
This is the free music / free beer model. Give the consumer free product that will encourage them to pay attention to the experience and/or message / marketing. In his case, Anderson wishes he could give away all of his content in exchange for paid appearances, advocating that it’s best to sell oneself than one’s particular product.
This would, of course provide the publisher with little in return and seems to only be most relevant in cases of digitally distributed media. But in the digital age, journalists and authors alike appear to be waking up to the value of reputation and personality over research and content. Heh, just look at all the people who watch O’Reilly, Hannity, et al.
About 200,000 books are published every year, but only ten percent of those make money for anyone involved. Anderson said he is working with his publisher to invoke one or more of the following strategies to deliver the content of “FREE” for free:
Digital model
– He will personally reserve the rights to the audiobook and pay for its production. Every physical copy of book will come w/ code to by audiobook (MP3) for free (or you can BUY the audiobook alone.
– Participate in booksearch, including Google from day one
– Distribute an eBook locked to a certain reader for free – perhaps Sony’s eBook reader. If free, word of mouth / influence / marketing channel potential is great.
– Unlocked audioBook w/ advertising inserted, i.e. Loudio, – the notion of ads in books horrifying to some.
– Pageview model on the web – flip page-by-page with ads beside
– Push as many sample chapters online as possible.
Analog book
– sponsored books – not new or all that rare today. AT&T put sticker on back of children’s book and distributed 140k copies to schools.
– Books with ads. Inside two covers could have content relevant ads making the entire print run entirely free at some level. You could still purchase the book ad-free for $19.95.
– Free rebate. Not all people will send back, but it builds relationship.
– Giving away 1,000s of books to influentials at book fairs / conventions.
– Unbounded universe of new influentials who respond to free.
The Long Tail sold better on Amazon than at Barnes & Nobles. Anderson attributes this to distributed word of mouth — he sent out 800 advance books to influentials and bloggers and got 600 reviews out of it.
O’Reilly’s Make magazine offers ad-supported how-to PDFs. The three top articles have been downloaded up to 100,000 times with a very favorable 5.7% click-thru rate for advertisers, according to Anderson.
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Later in the day, Chris Anderson announced the launch of BookTour.com, of which he is chairman.
I also conducted a video interview with Anderson for Inside Silicon Valley which should be posted later this week. UPDATE: It’s also available below.
photo by James Duncan Davidson via flickr using CC by-nc-nd license.
