The Economics of Free - A New Business Model

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The Web and its related tools are creating new distribution schemes that are driving costs down for every industry and creating greater uncertainty and more competition. A decade and a half into the great online experiment, the last debates over free versus pay online are ending.  The New York Times went free in 2007 as will much of The Wall Street Journal this year. This calls to mind Stewart Brand's original aphorism from 1984: "Information wants to be free. Information also wants to be expensive ... That tension will not go away."

Once the gimmick of marketers, "free" has emerged as a viable economic model; perhaps even a necessary one. Offering free music proved successful for the group Radiohead, Trent Reznor of Nine Inch Nails, and other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multiplayer online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411. This new reality is certainly going to impede upon every industry in the coming years, and quickly.

Get your head around the concept before it gets its hands around you. I share with you here the BBC radio program on the economics of “Free” http://downloads.bbc.co.uk/podcasts/radio/worldbiz/worldbiz_20090108-2030a.mp3 , and Chris Anderson's new book about the new possibilities that technology is presenting to business and organizational models. Each and every industry, business and organization will have to face a new world where competition will be offering increasing numbers of products and services in less expensive ways. Across every industry the impact of technology and its ability to deliver products and services less and less expensively is taking hold. There is tremendous opportunity but it requires radically different thinking. It also severely threatens the continuation of businesses and organizations hanging on to models of old.

Take a moment to listen in. A description of the program can be found here: http://news.bbc.co.uk/1/hi/business/7811481.stm