Anderson’s argument starts with a technological trend. There is a significant decrease in the cost of implementing and expanding technology systems (example Storage and bandwidth cost year on year falls) , which is giving way for the potential of a new eco-system. “From the consumer’s perspective, there is a huge difference between cheap and free,” Anderson writes. “Give a product away, and it can go viral.” He believes that companies in the digital sector can do just that, as a consequence of this falling cost.
Anderson and FREE.
However his argument can be challenged, for the simple reason that people prefer quality over quantity. The Times gives away its content on its Web site. But the Wall Street Journal has found that more than a million subscribers are quite happy to pay for the privilege of reading online. (Malcolm Gladwell, Priced to Sell).
Thinking about the broadcast industry, people prefer quality over quantity too. Therefore most of the PAYTV operators world-wide, are doing much better than the “free to air” public broadcasters. The principle of “Free” is not lucrative in this instance. Specialty and scarce services/content/products can be an organizations main source of survival, and indeed competitive advantage, why give it away for free? The public broadcast television which is a practitioner of Free is struggling financially. But premium TV, who offer scarce resources and specialty content, is more profitable even with the high rates.
Anderson argues that online companies like Wikipedia, Facebooks and Google benefits from transaction cost reductions, which is passed onto the end user. A user of Google docs, benefits from the free online “Word” packages, and free online storage. But this is not the same for all media entities. The revenue strategy and user needs that these online societies depend on are different from that of the Broadcaster.
In parallel with the release of Anderson’s Free, an equally important book Entitled Cheap: The high cost of discount culture by Ellen Ruppel Shell, explores the broad consequences of a free culture.
“Shell argues: “Free is a category unto itself. It can rob us of our reason. As a great seduction, she explains, “Free softens us up for the sell”. “It’s a unique price-point”, she argues, “Because it jettisons market-based values and the question of whether the object or service is worth the cost.”” Sourced from Telegraph.
Quoting Eric Schmidt of Google, Anderson is also willing to admit that the digital network economy tends to lead to monopolies, a development which, ironically, Shell also observes. Anderson himself understands the cultural perils of FREE. (Sourced from Telegraph).
Chris Anderson is right, free is revolutionizing the present times, however free information isn’t necessarily quality information. I believe it cannot be a law across all digital sectors, and we need to approach this with suspicion. The concept of free needs to be in line with the organisation. Scarce resources are more profitable with-out adopting a “free” mentally, even if it is acquired at a falling rate year on year. Hence there are plenty of companies that have chosen to run in the opposite direction from Free.
