Free

Chris Anderson, editor of Wired magazine and author of The Long Tail, has a new book out called Free: The Future of a Radical Price. His basic hypothesis is that businesses need to adapt to a new world where the price of Free (Anderson always gives it the capital "F") is the Future. Anderson, while providing some really interesting and compelling examples, overstates the case for Free. Malcolm Gladwell's review reads as if it was written by a person who gets paid to write for a living. That's not necessarily a bad thing, but both views are slightly off.

First, it's admirable that Anderson is taking Free seriously. Not only does he write a book explaining how others need to adapt to Free, he has made his entire book available on Google for Free for the next month. It's an engaging read, and I strongly encourage it if for no other reason than to learn about lots of interesting businesses. But, while Anderson's examples of Free are interesting, note that none of them are actually Free in every sense of the word:

• Gillette gives away razors Free but charges for the blades.
• Google gives away searches, a blogging service, a news feed, email, chat, and other products Free. But it collects your information and targets you for ads.
• Zecco gives away 10 Free stock trades a month if you have at least $25,000 in your account. It charges if you have less money than that or if you make more trades. It also makes interest when you leave money sitting in cash.
• Craigslist charges for job listings in seven cities only and for apartment listings in only one city (New York). Everything else is Free.
• SecondLife lets everyone have an avatar and explore the game for Free. It charges half a million paid users between $5 and $195 a month to rent virtual real estate.
• Webkinz has been the number one toy in America for two years. You have to buy a real stuffed animal, but then you have access to a Free web site, where you can also upgrade by paying more money.
• Runescape lets 5 million users play on its site for Free, but these are subsidized by the one million paid subscribers that generate $60 million in revenue a year (more than the most profitable online news content site, The Wall Street Journal, which is partially Free and partially not).
  
• Disney's Club Penguin is a Free website where users can have their own penguin and igloo. Users can upgrade their igloo or buy a virtual pet for their virtual penguin for $6 a month. It generates $40 million in revenue annually, and Disney paid $700 million to acquire it in 2007.

The list goes on: strip clubs let you see the show for Free but charge you for drinks. Casinos charge you for the shows but let you drink for Free. Etcetera, etcetera.

These are all interesting examples, but they're not all Free in the sense that they cost $0.00. They're free in that users can sample a version, but to get the full experience (or repeat it) they must pay, somehow or other. This is different than free.

Gladwell, while opposing Free intellectually, actually embodies it in his work. He works for a magazine with paid subcribers, but he makes a lot of those available on his Web site, and he makes his real money on his books and speaking engagements. Even his employer, The New Yorker, embodies some Free principles. It makes a significant portion of its magazine freely available online, including Gladwell's semi-regular columns (and book reviews!).

What's most interesting about Free is that it's not new at all. Information has always been passed by word of mouth. Businesses have always promoted themselves with sample products and free give-aways. Technology has sped all this up, but it's not new.

Some industries have adapted better than others. Newspapers, by and large, have not done it smoothly. Free shares the story of a Portuguese newspaper that used Free to boost its sales 36 percent over three months when it began offering Free silverware with every newspaper purchase. If you bought Monday's paper you'd get a free spoon, Tuesday a fork, and so on. Weekend edititons, the best selling and highest priced days, earned readers serving utensils. If you bought the paper every day for three months, you'd accumulate a full set.

Music, comparatively, has adapted much better than newspapers. It had to figure out how to survive on the radio, then on television, and now on the Internet. Record companies have struggled to block the spread of music file sharing, and their bottom line has suffered. But musicians themselves are doing quite well. Easier access spreads their music to more audiences, building larger fan bases for concerts, licensed music in movies and advertisements, and merchandise in general.

Free gives two good examples to support this. The band Radiohead opted to release their most recent album, In Rainbows, online in digital format and let anyone download the tracks for whatever they chose to pay. The band made more money on this digital release, before the album actually hit stores, than they made on their entire previous album. This could be an anamoly because of Radiohead's already-large fan base, but Free also gives an example of a musician named Derek Webb. He had a new record out called Mockingbird, but his label was financially unable to promote it. Webb decided to give it away free, so long as people provided him with their name, email address, and zip code. 80,000 people downloaded it in three months, and Webb is now able to use the information he collected to build a fan base. When he tours, he sells out his shows. Free made it possible.

But, you might argue, giving out personal information carries some cost, so it can't be Free. That's entirely true, and it's what makes Free little more than a marketing gimmick. This is what both Anderson misses and Gladwell scorns. Free is powerful and lucrative, but it's pretty much a sales gimmick nonetheless.