Here is Chris Anderson’s final contribution to our debate about his book Free: The Future of a Radical Price. See my earlier post An interactive review of Free by Chris Anderson for details. Please put comments on the entire debate at the foot of this post - I have switched off comments on the other posts.

John,

Let’s get to the meat of your argument: that ad-driven free has shown
its limits and Freemium is still small.

I don’t disagree.

But I also don’t suggest that we’ve worked out all the business models that will allow us to profit from Free. We’ve figured out some of them (ad-driven Free is still nothing to sniff at and Freemium, as you note, is a fast-growing multi-billion dollar business) and we’ll no doubt figure out others in the years to come. Maybe my book will even help.

The point, however, is that Free is not a choice in a digital economy - it is an inevitability. Not that everything is going to be free, but that Free is going to be a price you either use or compete with. The music industry chose not to go free, so the pirates did it for them. Professional content creators dreamed of paywalls, while the amateurs robbed them of their monopoly on consumer attention, without any business model at all (or need for one).

Just because neither I nor anyone else has figured out how to replace all the pay-based profit pools with free-based ones doesn’t mean the deflationary forces of digital economics won’t push price to the floor anyway.

I can see why you find this unsettling. And I wish I had all the business models worked out, so that every company could just apply the formula and rest easy. But zero is a disruptive price and may well see industry demonetize before they remonetize.

In short, Free is an economic force online that’s a strong as gravity. That’s not news - it’s been obvious from the time of Stewart Brand, Nicholas Negroponte, George Gilder and Kevin Kelly. What is news is that we finally have a better answer than “just throw the last generation’s business model - advertising - at it and hope it all works out”.

These are still early days for Freemium, and you’re right that many companies who try it won’t get it right (t’was ever thus). But I’d encourage you to look more closely at iPhone Apps, online games and the fast-growing software-as-a-service industry, and ask yourself: are you so sure that this isn’t the first 21st-century business model in the making?

I’ve enjoyed the debate!

Chris

July 3, 2009 9:00am in Media, Technology | Comment