Posts Tagged: anderson

Anderson’s Free is an interesting read for those of us studying the changes in digital media. This week I asked about how the concepts of a free market will change how we use the internet. The best example I can think of is one that Anderson used in the book about internet advertising. Old systems of advertising do not work for the Internet. Google uses ads for cars next to articles about cars. A print medium would not use this system because it would infer a lack of credibility.

I think the important question here is why? What is the difference between a print source and an internet source? Do we just automatically assume that those who write Internet content are have sold their souls to the devil (aka advertisers)? I guess so. Maybe we have place more trust in print sources, even now. I believe more in the New York Times than I do in Google for news information.

I think its a generational thing. I also asked about how notions of “free” affect how we think about things like piracy and open source software. I think that those of us who have grown up with the Internet see information as free to use. Why pay for something when you can rip it off? We don’t see it as stealing. I would never go into a store and steal a CD, but I have downloaded music illegally (although I pay for it now through iTunes). Because I’m able to read the New York Times for free or watch TV on Hulu for free, I don’t see why I should pay for other content, like movies or music. I’d rather let the advertisers pay for that.

I’d predict that eventually, all content will move to a free market. I can see a time in the future where third-party systems pay for the things we want to download and keep. I don’t think we will ever revert back to old notions of free like “buy one get one free” or “free gift.” I think that the new systems make much more sense for the way we consume media. Anderson’s examples of how Apple makes money not from selling the music, but from selling the iPods. Prices for iPods will stay expensive so that maybe downloads can one day move to free. Its difficult to predict how notions of free will change with evolution of the Internet, but I believe that Anderson hit on some important points and probed some interesting questions in his book.

In my first question this week, I asked if we adopted the 20th century version of free, could we tackle some of the problems we are having today with our idea of free.  In the 20th century, businesses would give something away for free that would then encourage consumers to buy a companion product.  Today, especially in the music industry, consumers get a product for free, and the business receives nothing in return.  Indeed, in some respects, we are starting to move back to the 20th century idea of free already.  In Brazil, for example, artists do not make money on their albums, for all intensive purposes they give their albums away for free.  In exchange, they expect their fans to come to their shows.  In addition, the site that we looked today in class– noisetrade.com— gives away music for free in exchange for information on fans.  The music industry cannot go on as it is now, with its old mentality and the modern idea of free.  Change is inevitable.

In my second question, I noted that consumers have a negative feeling towards content quality that was once offered for a price becoming free.  I asked if people would be willing to pay for content that was once free.  I believe that people will expect a rise in quality if a free product acquires a price.  For example, many iPhone apps are offered for free, but you can opt to pay for a different version.  Consumers expect for the paid version to have more features and be a better quality product.  When a price is attached to something, consumers have a different attitude towards that product.

In my third question I asked how our societies can be influenced by the idea of Free in China and Brazil.  I have already discussed in my response to question one how Brazil is interpreting Free in the music industry.  I think that this could be a model that America could learn from, but at the same time I think it would be very hard to implement this music business model in America.  Both businesses and consumers are so used to our model, broken as it is, and change could be hard.  Many music consumers do not go to concerts and the music industry is so dependent on record sales.  I don’t think the Brazilian model could be adopted.  In China, music artists make nothing on their record sales, but use the exposure their pirated music gives them can turn into celebrity, which in can lead to a profitable career through the opportunities that fame offers.  We see this model already in America, especially with reality TV.  People have become “famous for being famous.”  I think this model would catch on in American society easier than the Brazilian model because it is not a completely foreign concept to us.

“There’s no such thing as a free lunch.” or so the saying goes. But in Chris Anderson’s book, Free, he talks about the revolutionary new business model of using ‘free’ products to still make incredible profit. A strategy that web giants, such as Google, have employed to find great success.

Earlier, I had posted some questions that came to my head as I explored the ideas of Anderson. In response to those questions, I came up with the following:

1.) Why is it that many newspapers are still struggling with the idea of a free online edition when the main reason they are trouble is because they refused to evolve and adapt in the first place.

When I heard that a well-respected paper like the Boston Globe was switching from a free online edition to paid online edition, I was perplexed. It is common knowledge that newspapers have suffered the most in response to new advancements in communications technology but the rise of the internet was arguably the nail in the coffin. As stubborn news organizations clung to the traditional business model, they complained about reliability of internet news, amateur reporters, and end of “the good old days.”

However, many papers, like the New York Times, have since wised up and come up with new solutions such as beefing up their online editions with multimedia and content, and becoming news leaders online like they were in print. They have found that they cannot charge for these online editions because people will just use other free news sites so instead they have implemented new ad placement ideas and are beginning to get the idea that Anderson is preaching.

It seems strange to me that some papers, especially well-respected ones like the Boston Globe, still don’t get it. They have delusions that many people will have no problem paying for an online edition just like they did for the printed copies. But we have seen time and time again that this is not true. Unless the Globe implements some new business model when dealing with its site, people will go elsewhere. They need to utilize the idea of free content to attract a loyal following of readers who see them as a premium news source and will become reliable audience for online advertising.

2.)What kinds of things can sites like Twitter do to increase their profits? Obviously they would lose many users if they charged for accounts but is online advertising the key to keeping sites afloat?

Social networking sites like Twitter can obviously not charge people for its services because they will lose a large amount of users who do not see it as a crucial part of their life. However, Facebook has proved that by practicing Anderson’s ideas about providing ‘free’ products they still find great success. Twitter has tried to implement sponsored tweets but these are often met with hostility because people don’t like to have their news feeds broken up by commercials.

However, there are still ways to monetize the site without directly charging for the product. I have seen companies use popular celebrity “tweeters” to casually mention their products. Also, twitter can offer premium ad-ons such as desktop Twitter apps for small fees. The key to adapting a ‘free’ business model is to think outside of the box. It seems that, so far, they are on the right track.

Nothing is really free, and it’s definitely not always a choice, as Anderson argues.

People love free things. College students swarm campus events if free pizza is offered. People buy in stock for buy one, get one free. Free makes the market go screwy. But do we have a choice to participate in free? Students can choose not to eat the pizza, or consumers can choose not to buy the deals at the supermarket. Instinctively, it’s harder to make the decision not to engage in free.

It’s because humans have the deep rooted survival instinct. If we don’t buy the sale products right when they go on the market, then someone else will, and we’ll be out of a product. It’s the same reason why people line up on Black Tuesday for shopping deals after thanksgiving. The products aren’t free, but you feel like you’re getting a special deal over everyone else, and thus, ensuring your survival with better products.

Back to choice: the market makes it so we don’t really have a choice. In a roundabout way, Anderson argues that if you aren’t smart enough to take advantage of free stuff, then you’re missing out. Free  stuff may disrupt the markets for a little bit, but the markets always stabilize themselves in the end, because people will continue buying the product after potentially using the free sample.

The internet has made free access so much easier. You can download coupons for free stuff almost anywhere. Coupons.com is a good example for discounted brand coupons. There are multiple “laws and locks” that will attempt to constrain the spread of free on the internet, but people are already accustomed to receiving “free”.

There’s no way that these laws and locks will be able to keep people from receiving free stuff. People are not going to give up something they’ve been used to receiving for so long. And, if people like the free sample for long enough, they buy the product in the end.

Pandora does this. You can sign up for free internet radio with an email and password, and you receive 40 hours of free music a month. If you want more than 40 hours of music, you can pay for Pandora One, and get unlimited music with less advertisements. It’s relatively cheap to, for a bout 30-something dollars a year. To the user, it  may be worth the purchase, especially if they love the product.

Personally, when I run out of my 40 Pandora hours a month, I use a different email/password combination to log into my other Pandora account, and I continue listening to free music. No way am I paying for music if I know there’s a free version somewhere else.

1.  I was fascinated by the antedotes of Gillete and Jell-O and how these companies used Free to build their empires.  Now, our concept of Free is completely different from what it was in the 20th century, but if we were to adapt the of idea of Free– something free that leads you to buy something else– could we use this concept to tackle some of our big “Free” problems of the 21st century, such as music copyright?

2. Anderson discusses that our present idea of Free is relative, not absolute.  If something that we once had to pay for is now free, we expect a decline in the quality.  However, if something similar emerges that is free, we will not question its quality.  How does this concept work reversed?  How do consumers feel about paying for something at was once free?  Will they do it?  Will they expect a higher quality?

3. Anderson discusses how Free is incorporated into the cultures of China and Brazil.  How can our society be influenced by their Free culture?

1. How will different categories of “free” change how we use the Internet?

2. Will most of the Internet continue to operate under third-party systems, freemiums and nonmonetary markets? Or will they converge to create some other form of “free”?

3. How do the new notions of “free” affect things like open source software, piracy, and file sharing?

4. How will the new systems of “free” change or affect the old systems?