July 29, 2009

Book Review - Free by Chris Anderson

I have just read Chris Anderson’s book Free. Or to be fair, I did not actually read it. I downloaded it as a free audio book. One of the free versions of which you can reach the book Free.

Chris Anderson is, for those of you that do not know him, the author of the book The Long Tail and editor-in-chief of Wired Magazine.

Though Chris does not make any direct money on the audio book I consumed, he has a shortened (3h instead of 6h) version for sale. This is exactly his message in the book, that when the marginal cost of distribution reaches for zero, the prize will inevitably follow. This it at least true in the intangible economy where his two versions of audio books clearly show one of the several business models containing an element of free, which he lays out in the book. This model, freemium, is based on that you get something for free (the audio book) and you or someone else pays for a premium version (the shortened version).

The book Free also makes example of other ingredients in the complicated business model web. Since Chris is not only giving away the audio book, he is also giving away a pdf version, even though selling the paper book he must make money elsewhere. And yes he does, and do not make any secret of it either. One could almost see the whole book project as a conceptulizer and facilitator for his more lucrative business in selling his time. This through speeches or workshops for instance.

This brings us to one of the key factors in the (Anderson) Free model, except the zero marginal cost, the relation between scarcity and abundance. He argues that in a world, the intangible economy (or the economy of bits instead of the one of atoms), where the cost of producing one more copy of a specific product is almost none it will also be produced. So, this means that the seller has to find a business model where the scarcity comes in to play. Either if it is a constructed one as the premium service on for example FT.com or if it is the limited time of Chris Anderson.

What to learn from the book
I think the book has an interesting point in that we have to not just accept but to act on that free will be a key ingredient in many business models, and already is. This is especially interesting in relation to the new and emerging business models containing copyright, whether it is rights to music or to the written word, where I believe that the rights holders need to think hard on what they are selling. Is it a physical carrier of information or the information itself which is the valuable object?

The distinction between the physical carrier and the content becomes crucial in business model innovation and to actually see and construct the value proposition correctly to each group of customers, both in how if at all they should transfer money in return and also in what the product is and how it can be used.

Do I think you should read the book?
Well, Chris is sometimes repetitive and if you have the money but your time is limited, why not pay for the abbreviated version. The book has an interesting message and covers many innovative business models, which in themselves could be a reason to read it, but the main point might have been better off in a 30 page article.

In The New Yorker Malcolm Gladwell also writes about Anderson's Free and his conclusion is that not everything wants to be free. Chris Anderson responded to this in an interview with Charlie Rose (viewable online).

For those of you eager to know what he has to say, Chris Anderson gives an one hour presentation which is viewable through fora.tv.

[Update] Our Friend Anders Sundelin at TBMDB.com has written a post where he provides the full list of free bisiness models from the book.

[Update] For Swedish speakers, DN has written about the book here.

Johan Örneblad
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