FREEEEEEEEEEEEEEEE

I enjoyed reading Anderson’s Free this week. It was interesting to learn about a concept I have always accepted but never questioned. From the get-go, Anderson explains that the concept of free isn’t new. Anderson describes plenty of examples of different forms of free and how the concept has been used for hundred of years now. Anderson believes that free models fall under four main categories: Direct Cross-Subsides, the Three-Party Market, Freemium, and Nonmonetary markets.
To relate back to my framing post, my first question on was about the freemium model. “What is the ‘freemium’ model? And how is it effectively used in today’s society?” Freemium is a business model that is becoming really popular with web-based services, where the basic service is free but users are charged for the premium service. Pandora, Flickr, LinkedIn and Skype are all examples of this business model. The model takes on the 5-percent rule: 5 percent of users support all the rest. Anderson says, “In the freemium model, that means for every user who pays for the premium version of the site, nineteen others get the basic free version. The reason this works is that the cost of serving the nineteen is close enough to zero to call it nothing” (27).
Another question I purposed was: how is 21st century “free” different from older generations of “free”? Discuss Anderson’s idea of the atoms economy vs. the bits economy. One example of the old kind of free is the story about the Gillette family. Gillette figured out that they cold make more money selling the blades than the razor itself, so the basically gave the razor away and made a profitable market for selling the blades. Now, in the digital world, there is no paying later. Anderson discusses the atoms economy vs. the bits economy. Anderson explains it best:
“The twentieth century was primarily an atoms economy. The twenty first century will be equally a bits economy. Anything free in the atoms economy must be paid for by something else, which is why so much traditional free feels like bait and switch—it’s you paying, one way or another. But free in the bits economy can be really free, with money often taken out of the equation altogether” (12).
This idea explains why in the atoms economy, supplies get more expensive over time with demand, while in the bits economy (the online world), things get cheaper. “The atoms economy is inflationary, while the bits economy is deflationary,” Anderson explained (12).

Tags: Chris Anderson; Free