Chris Anderson: FREE The Future of a Radical Price

At one time, giving away free stuff was an attention
grabbing sales gimmick. That’s now changed
dramatically. In today’s business environment,
companies can profit more by giving things away
than they can by charging for them. Notably this
isn’t just a digital economy phenomena. It applies
right across the global economy. In more and more
industries, abundance thinking is becoming a far
more powerful engine for commerce than scarcity
thinking ever has been. Free is becoming a
business strategy which might just end up being
essential for any company to survive.
The online economy’s costs continue to go down
dramatically. This has created the unique situation
where the primary inputs of the entire industrial
economy are falling faster today than at any other
time in recorded history. To take a case in point in
1960, a single transistor sold for $10. Today, when
you buy Intel’s latest microprocessor chip, you’re in
effect purchasing two billion transistors for $300 –
which works out to around 0.000015 cents a
transistor. These and other similar cost decreases
are generating a tremendous reduction in costs for
all three of the basic building blocks of online
commerce – processing power, bandwidth and
hard-drive storage.

“At the beginning of the twentieth century, Free
fueled a consumer revolution that defined the next
hundred years. The rise of Madison Avenue and
the arrival of the supermarket made consumer
psychology a science and Free the tool of choice.
Free-to-air radio and television united a nation and
created the mass market. Free was the rallying cry
of the modern marketer and the consumer never
failed to respond. Now, at the beginning of the
twenty-first century, we’re inventing a new form of
Free, and this one will define the next era just as
profoundly. Today, the most interesting business
models are in finding ways to make money around
Free. Sooner or later, every company is going to
have to figure out how to use Free or compete with
Free, one way or another.”

– Chris Anderson