Transcript Scary Things to Do Online (if you dare)
FREE (Or: How I stopped worrying and learned to love $0.00) Chris Anderson, Wired What is “free”? “Liber” = freedom “Gratis” = zero price (contraction of gratiis "for thanks," hence "without recompense”) “Electricity too cheap to meter.” What happens when things get free? “Waste is Good” Alan Kay, Xerox PARC (1972) “Waste Transistors” “Waste Storage” “Waste Bandwidth” Cost to stream a movie: $0.06 20th Century: “Atoms Economy” •Things get more expensive • Free = direct subsidy “No such thing as a free lunch” 21st Century: “Bits Economy” •Things get cheaper • Free = indirect subsidy “The best things in life are free” Free #1: A marketing trick Free #2: Ad supported Free #3: Freemium Options: •Time limited •Feature limited •Seat limited •Customer limited Free #4: Gift economy Econ 101(Bertrand) “In a competitive market price falls to the marginal cost” Round down! If the unitary cost of something is approaching zero, treat it as zero and sell something else. Five Free Lessons From Games 1) People will pay to save time 2) People will pay to lower risk 3) People will pay for things they love 4) People will pay for status 5) People will pay if you make them (once they’re hooked) Competing with Free: Microsoft 1970s: Competing with Free 1980s: Competing with Free 1990s: Competing with Free 2000s: If you can’t beat them, join them Free’s hard: needs an upgrade path But the trend line is clear Whatever business you’re in, sooner or later you’re going to have to compete with free. What’s your plan?