Hey, look at this! Only 14 years after I put it into practice, WIRED magazine’s Chris Anderson (author of The Long Tail) has fully grasped my business model: making money by giving away something of value for free.
His article, Free: Why $0.00 is the Future of Business, looks at the economics of giving things away (starting with the granddaddy of the concept, King Gillette and his razors), and how it’s fundamentally changing business — and enabled mine back in the mid-’90s.
“Between digital economics and the wholesale embrace of King’s Gillette’s experiment in price shifting, we are entering an era when free will be seen as the norm, not an anomaly. How big a deal is that? FREE CHANGES EVERYTHING.”
As We Already Knew
Yes indeed. And as far as I know, This is True was the among the first (if not the first) to practice one of the concepts discussed, “Freemium” — with my combination of for-profit email publishing by offering subscriptions for free, which was supported both by online and offline viral marketing.
There are plenty of other examples in the article, including one that could well turn the ailing music industry on its head: a band in Brazil that encourages “piracy” of their CDs (emphasis added):
Calypso distributes masters of its CDs and CD liner art to street vendor networks in towns it plans to tour, with full agreement that the vendors will copy the CDs, sell them, and keep all the money. That’s OK, because selling discs isn’t Calypso’s main source of income. The band is really in the performance business — and business is good. Traveling from town to town this way, preceded by a wave of supercheap CDs, Calypso has filled its shows and paid for a private jet.
I’ve always said that the Internet changes old business models and enables new ones. Finally the pundits are fully grasping it. (I’m obviously not the only one who realized it long ago; Google and Amazon did too, among others.)
Anderson has obviously spent some time thinking about it, realizing that online business models could change the field of economics as well. “Read your college textbook and it’s likely to define economics as ‘the social science of choice under scarcity.’ The entire field is built on studying trade-offs and how they’re made,” he says.
Though the field of economics is robust enough to be able to deal with how online business is changing things. It talks of “externalities, a concept that holds that money is not the only scarcity in the world. Chief among the others are your time and respect, two factors that we’ve always known about but have only recently been able to measure properly.”
The Long Tail
I’ve been taking advantage of Anderson’s “long tail” concept with my online archives of thousands of stories. Just one minor for-instance: if you Google the woman in the story in the previous blog entry to this one, “Stephanie Pochron”, you’ll find (at least as of this writing) my blog post about her is in the top 5 results, even though that entry was posted less than 24 hours ago.
That’s “long tail”: an esoteric topic that someone might search on brings traffic to my site. Traffic that could result in a subscription to True and perhaps, at some level, income to keep the whole thing going.
Thousands of True stories in the archive means thousands of possible long-tail topics that might bring in more readers — and more income to keep the machine in motion. The pennies add up over time.
Yep: free changes everything.
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