Chris Anderson’s first book The Long Tail, propelled the Wired Magazine editor from respected tech maven to innovative business book writer. His first book, published in 2007, took an in depth look at the way the internet has disrupted the recorded entertainment  market. Looking particularly at the music and book industries Anderson examined the ability of niche products to reach a large enough audience to be highly profitable. With nothing but a simple analysis of how many more books Amazon can sell than your average (if it hasn’t already been shuttered) neighbourhood book shop he expertly illustrates how the retail rules most of us grew up with no longer apply.

Chris Anderson’s latest book is no less thought provoking. The full title, “Free: The Future of a Radical Price: The Economics of Abundance and Why Zero Pricing Is Changing the Face of Business” might not roll off the tongue but it does lay out pretty clearly what the book looks to tackle. Kicking off the book with an interesting study of how free gained its place in the marketing arsenal, popularised by the likes of King Gillette with his revolutionary safety razor.

Following the remarkable story of how free was adapted to support business models the world over Anderson makes a point of picking out the most innovative in their fields, including many in the main text of the book and many in his “sidenotes” where he asks and then answers questions such as “How can an electric car be free?” The most important model which Anderson seeks to establish throughout the book is the idea that some products, through technological innovation, can be made to be “almost free”.

The examination of this statement is made through the perspective lens of Moore’s law, the long term trend where processor power, hard drive capacity and even megapixels in digital cameras are seen to double every two years, tied to the number of transistors which can be placed in an integrated circuit.

Breaking down the business models which he examines, Anderson outlines four categories:

- Cross subsidies: where companies give away a products to ensure a lock in to another, like Mr Gillette with his razors.
- Ad supported: a speedy romp through the world of newspapers, radio and television, one of the more transparent free models we encounter in our day to day lives.
- Freemium: a really fantastic examination of how the majority of a user base, using a product for free, can be supported by a small percentage of paid users. This section included a fantastic selection of case studies going into the numbers from specific industries.
- Non monetary markets: in which participants motivated by non-financial considerations develop things like Wikipedia, seeking payment in the form of community recognition and adoration.

One of the most innovative parts of this book and the way that it is being distributed is that Anderson is following through on his own predictions and business models. Initially the book was given away for free in ebook form and as an audio book. Leading up to the US launch of the hardback the ebook has been taken down from Scribd where it was being served, showing that although Anderson is good, he doesn’t have infinite control over his publishers. I downloaded the audio book for free in MP3 form however and listened to it in its entirely, completely legally, for free.

Anderson here is acting out on one of his main take away lessons from the book: things which are made from “bits” like audio books or webpages which are created once and then can be digitally replicated many times without the need for additional resources, can be free. Things which can be made from “atoms” such as a physical copy of Anderson’s book require natural resources to create and the more you create the more resources will be required. Since this is the case you cannot give the product away for free.

Combine the initial free copies, acting as marketing and publicity, building buzz around the product, with the paid for hardback copies of the book which people will want to buy because they have heard so many great things from their friends, and you have what Anderson considers a sound  business model. He might be right. My hardback copy is currently somewhere between Amazon’s supply warehouse just outside Northampton and my flat in Liverpool!

The other interesting aspect of this model is that although the product is effectively the same, a book, the different delivery methods give it a huge range of values. Anderson gives away the ebook for free because it was locked down to only being viewable on a webpage: you don’t have the take away convenience of a book. With the audio book there was no way of using it as a reference or dipping in and out at specific points, if you wanted all the information you were pretty much committed to listening for the whole 7 hours. In a world where time equals money this is a major (theoretically costly) undertaking.

It should probably be mentioned that the Wired Mag’s editor is not without his dissenters. The Harvard Business Review has published some interesting figures and a study challenging Anderson’s Long Tail model. Malcolm Gladwell also has an interesting piece in the New Yorker questioning the logic behind Free. On his blog Anderson doesn’t shy away from highlighting and addressing these critiques of his work with what appear to be solid counter arguments and rebuttals.

The main reason for taking the time to review the book is really this: Anderson uses a number of business cases from the new media and entertainment industries, undeniably two sectors constantly looking for ways to make money in a fast changing business environment. The examples and case studies, backed up with numbers which have obviously been solidly researched, propose models which one should be able to tailor for deployment in any industry. The case studies alone make this book invaluable and really make you stop and think about what are currently considered set rules within our industry. Every time I listened to more of Free I felt inspired to brainstorm ways of disrupting common business models with the arts.

Free: The Future of a Radical Price
Random House Books
25 June 2009
London
978-1905211470
Hardback format is 288 pages
Available as a book at Amazon.co.uk
Available for FREE as an audio book from the blog

Update:
Free is available as an audiobook, unabridged and at no cost from both Spotify and iTunes! I didn’t find this out until today and thought it well worth sharing with you. The Spotify link is UK only and I suspect, as it is in the US iTunes store, that the iTunes link is US only. You can download the entire book as a PDF or ePub, to read on your iPhone or iPod Touch at this website. The site advises the offer will expire however I’ve just entered my information and downloaded both.

Photo credit: Still Wanderer on Flickr

Related posts:

1. Does Arts Marketing on Facebook Lack Innovation?

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