1. FREE
by Chris Anderson
HOW TODAYâS SMARTEST BUSINESSES
PROFIT BY GIVING SOMETHING FOR
NOTHING
REPORT BY IVAN LEE
TS STRAMA
AGSB
2. Free Things to Think About
ď How some companies can give some products away
in order to increase the market for the products that
they charge for.
ď The book is meant not to preach the gospel of Free!,
but to help readers find a path through an economic
reality that has been with us and gathering strength
for nearly a decade.
ď Isnât âFreeâ a socialist-communist idea?
3. Objectives
ď What is FREE?
ď Brief history of FREE as described by Chris
Anderson
ď The Psychology behind FREE!
ď How FREE! is possible
ď Introduce Freeconomics.
4. What is FREE?
ď 20th Century free versus the 21st Century FREE!
ďĄ Atoms versus bits
ďĄ Nothing free versus everything [digital] is free
ďĄ Inflationary versus deflationary
ď Etymology of FREE
ďĄ Latin: Liber and Gratis (freedom and thanks)
ďĄ Celtic: Freogan (beloved and friend)
ďĄ Free = too many meanings
5. The 4 types of FREE
ď Direct Cross Subsidies (Marketing model)
ď Three-Party Market (Ad supported free media)
ď Freemium (Digital economics)
ď Non-Monetary Markets (Gift economy)
*All shifts money from product to product / person to
person / now to later / monetary to non-monetary
6. The History of FREE!
ď Free is nothing, nothing is Zephirus
ď An economic system based on nothing?
ďĄ Barter Trade (Close knit groups)
ďˇ Collectivism â the âYOUNGâ gift economy
ďˇ The Dunbar Number is 150 people max!
ďĄ Monetary Economy (Goodwill)
ďˇ 19th Century â the birth of market economy
ďˇ Free reduced to a marketing gimmick
ďĄ Nation States (Progressive Taxes and Charity)
ďˇ 20th Century transformative mediums
ď˘ Radio
ď˘ Corn
ď˘ Plastics â Is it really cheap?
7. The Psychology of FREE!
ď Free is relative, never absolute
ď Free as having to pay for something, even at minimal
ď The Penny Gap = 0 and everything else
ď Free as waste
ď Free as a Time-Money option
ď Pirates of the Digital World
ď Free is really free
8. How Free is Possible
ď Mooreâs Law (Intel)
ďĄ Faster computing power
ď Meadâs Law
ďĄ Advocated âwastingâ computing power
ďĄ Technologist's job is to make technology cheap
ďĄ The cheapest delivery system possible: As price drops, thereâs
advantage to treat them as if it was free...
ď The Real Digital Age
ďĄ Everything that bits touch is also touched by its unique economic
proportion â cheaper, better, faster
ď Information wants to be expensive and free at the same
time
9. How Free is Possible
ď Google and the birth of a 21st Century economic
model
ď Google: Free is the product philosophy
ďĄ Miracle of digital economics
ďĄ Data centers
ď But why go free? The âMAX STRATEGYâ
ďĄ The best way to reach the biggest possible market and achieve
critical mass
ďĄ Google understood its business well enough: Use free to
encourage people to spend more time online so that they can
make more money out of it
10. How Free is Possible
ď If free is free, who makes all the money?
ďĄ Craiglist example: erased a $30B industry to generate $40M
ďĄ The eventual winners are the end consumers
ďĄ Compliments the capitalist idea (as opposed to socialist-
communist idea) â efficiency leads to better prices
ďĄ Redefining the market: from matching two people to a broader
sense of an ecosystem with many parties
11. Freeconomics
ď The new media models for the digital age: Versioning
ďĄ Freemium is versioning where one is free and others are paid
ď How big is the Free Economy?
ďĄ $300 Billion?
ďĄ Definitely hard to calculate...
ď The Freeconomics
ďĄ Joseph Bertrand: âIn a competitive market, price falls to the
marginal costâ = Free is inevitable
ďĄ The new monopoly: Network Effects where âmonopolistsâ like
facebook do not have pricing power
ďĄ Every market is different â making money out of Free is a matter of
creative thinking and constant experimentation
ďĄ Freeconomics â money becomes secondary to attention economy
and reputation economy