Posts Tagged: Chris Anderson

I am still unconvinced that this Free economic model will translate easily to certain forms of art. A musician must be independent in order to exploit this economy, because record labels in America don’t have business model that gives away music. Underground rap artists use the free mixtape circuit to create ‘max distribution’, creating an audience by literally giving away mixtapes (or selling them at bargain basement prices.) This gets them name recognition much faster than they could get on a label, and allows them to capitalize on that notoriety in the future. Artists like Drake and Nikki Minaj were touring with well known acts simply off the strength of mixtape recognition – but again, they were not signed to major record labels. Exceptional musicians can parlay free music into tour and merchandize money, but I remain unconvinced that can work for the average artist.

That’s my biggest criticism of Anderson’s view. It seems overly optimistic and somewhat elitist. He focuses on the exceptional cases – the Googles, the Wikipedia’s, the RyanAirs, and extrapolates an entirely new business model from them. Even when takes the ‘micro’ view and looks at folks who make money through Second Life, I still doubt the overall feasibility of it all. When it comes to people who actually make a living in this Free economy, we are still in the early stages. It is premature to assume that the average Joe Blow who works at the gas station or inspects parts on an assembly line will be able to transition to this new economy. And if THAT guy can’t, what does that say about our country overall? Or the ultimate feasibility of Free?

“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.

Chris Anderson is my hero. Yes, who wouldn’t agree with a guy who believes in a ‘free’ business model? But it is much more than that. Anderson is a true forward thinker who is helping to drive our nation’s economic system to let go of it’s old ways and evolve to better fit in a digital world. Some of the questions that I still have are:

1.) I heard that the Boston Globe is changing it’s online edition from free to paid. This baffles me. It almost seems like going backwards. 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.

2.) As Anderson mentions, software giants, like Google and Facebook, are able to make billions without charging a penny for their products. However other popular sites, like Twitter, are still trying to figure out the best way to make a profit without charging for their service. What kinds of things can sites like Twitter do to increase their profits? Obviously they would lose many users if they charged but is online advertising the key to keeping sites afloat? In that regard, can the Hulu model of ads in streaming video work as a more widespread idea for all free “premium” video?

‘How can people in business school get any sleep right now?’

That’s what I thought reading this book. ‘Free’, by Chris Anderson, leaves me clearly convinced that the internet has unleashed a new alternative to doing business. It has taken what King Gillete started and expanded it exponentially. By reducing distribution costs to zero, it has turned 20th century ‘bait and switch’ free into 21st century, ‘truly free.’ Which means you can literally give away free products that you never make money from and still be hugely popular and successful in business (like Google or Linux.)

1.) Does this model translate to art? Software and digital service providers (like Google or Wikipedia) make it work. But can independent musicians or illustrators or writers make it happen? Art is a fickle game – could a rapper make good money giving away his or her music away totally for free from the beginning?

2.) Why are traditional news outlet struggling so much in this model? They have operated in a semi-free environment for a long time. Is it an stubborn old school attitude that refuses to let them convert to free? Or is it that many of them are owned by larger companies that won’t allow them the flexibility to change?

3.) How will the Free model affect software giants like Microsoft and Apple? So far, cloud computing wins for convenience and novelty, but Google Docs still lags behind Microsoft Office. And the average person will pay a dollar for a song before they go futz with retarded music formats and spam laden torrent sites. Free still feels like an internet phenomenon – how long before it invades our home, and we have free cable? Free desktop computing? And truly free music?