9 September 2009 • 7:00 am

Making Money From Giving Things Away

free_cover_200After a bit of a slog, I am now done reading Free: The Future of A Radical Price (Hyperion; $26.99), by Chris Anderson, editor in chief of Wired magazine. You may have heard of Anderson from his 2006 bestseller, The Long Tail. Anderson’s book hit my radar screen from several directions at once over the summer, including an interview on NPR’s Fresh Air (listen for free) with one of my favorite interviewers, Terry Gross, and a review in the New Yorker (read it for free) by one of my favorite authors, Malcolm Gladwell. When Gross and Gladwell are both talking about the same thing, it is hard for me to resist. So in keeping with the spirit of the topic, I used an old model of free, and got the book from our local public library. Free is also available as an abridged audio book for free (of course), online at   

Anderson offers an initially breezy, but eventually somewhat tedious journey through the concept of free. Even the word itself (which I swear must appear an average of ten times on each page) has to be parsed – free as in “freedom” and free as in “at no cost.” To ensure our comprehensive understanding of the phenomena of free, Anderson journeys from history into behavioral science, literature (science fiction), and pop culture.

Much, but not all of the discussion of the contemporary concept of free is rooted in technology. When companies like Google give away so much of what they do (search, maps, mail, online applications, operating systems), and yet are so profitable, it is time to reexamine the relationship between price and profit. And it is examined in detail, indeed. Over a dozen sidebars sprinkled through the book offer brief case studies of businesses built on free models, and the ample back matter includes a list of fifty business models built on free.

At the center of technology-based free is the philosophical foundation found in Stuart Brand’s famous 1984 quote (emphasis added):

On the one hand, information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.

Of course, all that most people remember is, “…information wants to be free.” You’ll learn more than perhaps you want in the entire chapter devoted to parsing the quote. Anderson’s contention is that with dramatic declines in the cost of three commodities (storage, bandwidth, and processing), the marginal cost of delivering information is so close to zero that it might as well be free. But there is much, much more that we learn about free; far too much for me to coherently capture here.

It is hard for me to imagine any contemporary or future strategist who won’t someday become caught up in the reality of the radical pricing models that free entails. Recorded music and newspapers are but two of many industries today that are wrestling with technology-driven pricing upheavals. And perhaps that is the greatest value of the book, the message that “free is real, and it’s here to stay” for those who may still be dismissive of the idea. But that point (at least for me) was made easily and quickly. I finished reading Free both exhausted and hungry – exhausted at having been beaten over the head with the concept and Anderson’s taxonomy of different forms of free, and hungry for a better understanding of how to approach strategy development in organizations where free is both threat and opportunity. Now that we understand that free is real, perhaps we’ll invent a better way to make pricing decisions than we do today.

Is your organization coping with free? What is the impact? What is the opportunity? How is your leadership team responding? Please comment below.

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