Posts Tagged: Google

It’s all about “freeconomics” and it’s being driven by the technologies of the digital age as the price of bandwidth and storage continue to drop.  Free started in the twentieth century by companies giving away something that encouraged purchases of other goods.  Now that we have entered the bit economy, free can really be free.  For example: while bloggers don’t post ads on their sites, they hope to enhance their reputation and by doing do get more paying work in return.  In today’s world a reputation’s credits can turn into cash.

But free does not simply apply to the digital world.  Advertisers have been known to pay some or all of the cost of publications.  Free versions of services sell premium versions.  Bands give away music to in return for paying shows.  The idea of free is becoming much more prevalent in today’s economy and industries need to learn to adapt to this growing economic trend.  This is a time period when we will see which companies fail and which companies “get it”.

The most difficult part of this new economy is to get users to pay anything at all.  The enemy of “free” is waste.  You are less likely to waste something you pay for and, in this sense, free can cause more harm than good.  For those of us that have more money than time, we would rather pay to have something done for us than do it ourselves.  It’s a time saver.  A successful example of this is iTunes.  Prices come with guarantees and free typically doesn’t.  Producers in the digital realm will find themselves completing with free.  It is not going away any time soon.

Google is a company that understands the world of “freeconomics”.  They first invented a way to search online that gets better as the web gets bigger.  Their next idea allowed advertisers to create as that matched keywords or content and bid against other advertisers to obtain the most prominent positions.  They then created other online products to extend their reach and only added ads when it made sense.  As a result, Google wants information to be free because as the cost of information falls it makes more money.

But lower prices can be disruptive.  The free classifieds site Craigslist has taken billions of dollars our of America’s newspaper companies since it’s found in 1996.  With technology, the notion of scale can also make a difference.  If only one out of thousands of Wikipedia visitors decides to create an entry on the site, you still benefit with a pile of information from around the world.  Microsoft’s Encarta CD encyclopedia was put out of business and they put traditional physical encyclopedias out of business before them.

Overall, Anderson makes some truly interesting points on the concept of “free.” Personally, I am on the same playing field as Anderson and in our consumer driven market, free has evolved into something totally different then its “traditional” meaning. His introduction of the four cross-subsidies: direct, third party, freemium and non-monetary really made me think about the whole “buy one get one free concept.” I think in some aspects Anderson is harsh with his “sink or swim” mentality but I think that is a product of our society, survival of the fittest is nothing new!

1. Could the concept of “free” shape how people access information in the future and hinder the print journalism world?

I think after reading the chapter on Demonitization and advertising and the new media models, print journalism is definitely on the down fall. Although print journalism is suffering due to media convergence anyways but it is the advertising concepts that is hindering growth in that industry. The use of Craigslist and google is hurting the classified ad world indefinitely. As far as how people access information, I think is is shaping the amount of information people seek and it is an ongoing system of data overflow.

2. Chris Anderson talks about open source software and mentions a case study of google vs yahoo information, which brings to mind, could all of this free information lead to a decrease in respectable journalism because anybody can access information that a journalist normally utilizes to seek and broadcast?

I think Anderson’s “sink or swim” aspect of his book applies to this question. Information gathering has changed but to be a good journalist, one must find a way to seperate yourself. Free writers are not a problem (according to Anderson) but I think they are. They are taking away from other peoples contributions but if people are just accessing information, why is that ok? Yes, Wikipedia is still functional but is this concept contributing to media convergence and hurting certain markets, I think so!

3. One thing I thought was very interesting is his book was his talk about Youtube how it is “NOT a threat to television because it is full of crap,” which brings me to my question is quantity better than quality when it comes to accessing these videos or will people settle for mediocre video quality because of their fast paced need for this type of media?

I think youtube and hulu are going to be around for awhile and that is because it fits into the fast paced lives of our society. I know if I miss my favorite television show I can find it later on one of these two sites and I would agree that youtube is not hurting TV but is Hulu even though there are advertisements? Anderson makes it a point to mention what a piece of crap youtube is but is that because it is not like hulu and does not advertise or is it because video quality is really bad in some aspects. I do not necessarily think people sacrifice quantity because there is an abundant amount what they need at their beck and call but sometimes at the risk of not having ideal quality. Quality is not as imperative as time and place of content these days, in my opinion!

‘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?

Week 7: Digital Goods / Digital Markets

FREE – The Future of a Radical Price
– Chris Anderson

1. Anderson discusses how “free” got started in the twentieth century by companies giving away something that spurred purchases of related goods.  What is “freeconomics” and what is it being driven by in today’s world?

2.  In 1996 the Village Voice became a free newspaper.  Since it no longer charged a subscription fee, readers perceived that it had a lesser quality.  On the other hand, The Onion started free and stayed free.  It is a much bigger success.  How is this possible?

3.  Anderson points out that, sooner or later, most producers in the digital realm will find themselves competing with “free”.  He also mentions that free can sometimes cause more harm than good.  Why should we go “free” if there is harm?

4. What is the engine behind “free”?  What is it that allows people to try pricing schemes that would otherwise seem insane?

5. What is Google’s reasoning behind wanting information to be free?  What does Anderson’s argument mean when he says lower prices are disruptive?

6.  China is a country where piracy has won and where the notion of copying work of others is a gesture of respect.  Chinese students have a hard time understanding that plagiarism is wrong.  Is there something we can learn here?

Applied Mass Communication Theory: Chapter 11
– Rosenberry and Vicker

1. Nearly all media businesses need to serve two markets simultaneously: audiences and advertisers.  However, one is always favored over the other and it’s rare that both benefit.  Is it possible to fix this dual market arrangement so that it is more fair?  Or should we select one of the markets to always be favored no matter what?

2. The goal of economics is determining what gets produced and who benefits by it.  But if online content is thought to be free, how do online producers benefit?