Rise of the freeaholics
FREE: THE FUTURE OF A RADICAL PRICE
By Chris Anderson
274 pages Available at Powerbooks
Question: When did people become such shameless freeaholics?
We have become a planet of freeloaders. We want our MTV — for free. We want newspapers online — for free. We want online encyclopedias — for free. (Come on: Who has seriously shelled out any of their own money to make Wikipedia a better, more credible information source?) We want our music downloaded — for free. We want to watch movies — preferably pirated, which is as close to free as it gets. We want more space to hold our junk e-mail — unlimited space — for free.
I’ve wondered about this for a while, ever since listening to Wired editor-in-chief Chris Anderson give a lecture on the subject in Amsterdam a few years ago (a trip that was not exactly free, but pretty darned close). Anderson, who wrote The Long Tail to explore this emerging trend in marketing, is of the mind that digital technology will continue to make it easier to lower costs and increase allowable space online and in gadgets. That’s why, for example, Yahoo Mail now offers unlimited mailbox space and each year’s iPhones and iPods offer more gigs and features at a lower cost than last year’s. (You can’t help drooling over this, or lamenting the fact that you bought yours too early.)
Anderson’s new book, Free: The Future of a Radical Price, goes even further. He explores actual businesses — selling real things, made of “atoms,” not “bytes” — that are starting to give away everything you can imagine. Long-distance phone service, airline seats, silverware sets, even electric cars — for free. This is not sci-fi stuff; it’s happening. But there’s a catch, of course. The phone service, Skype, is free, but requires upgrades to call cell phones; the ticket from upstart Irish airline Ryanair includes just the basic cost of a seat, not include luggage fees, water, priority boarding costs and such; the silverware comes one piece at a time, bundled in each Sunday copy of Portugal’s Jornal de Noticias newspaper, so you effectively have to buy 60 successive copies to get a full silverware set; and the electric car is free, but costs varying amounts to keep it running, depending on your daily usage and the global price of oil.
This may sound like the old bait-and-switch, but Anderson thinks we’ve moved onto a new way of doing business. “Free” used to be a come-on, a way of getting someone to buy something more expensive (think of Gillette disposable razors: they practically give away the razors, but you have to keep buying razor cartridges). But now it’s about something else, says Anderson: it’s about buying a customer’s future faith by offering stuff for free.
We’ve come to regard “free” with suspicion. When something is given away — say in a crowded mall or a busy New York City street — it often gives us worse buyer’s remorse than buying a luxury item would. We feel saddled with the free item, somehow. (This is admittedly not the case in Metro Manila, where the urban poor are quite content to get their hands on any freebie. But even street beggars, I’ve noticed, get a little shirty when handed a fist of smaller-than-a-peso coins.)
Free somehow feels devalued in the digital age. Once in a while, I’ll try watching a movie on YouTube in 10-minute installments because I can’t find the DVD anywhere locally. But a funny thing happens. The quality is awful, and it feels too much like work, sitting through jerky digital streaming. So, if I like the movie enough, I end up ordering the actual DVD from Amazon or seeking it in stores abroad. The same thing holds true for downloaded music: we end up wanting the “official” packaged version, if we’re true fans. So the tacky, “free” come-on version can lead to actual sales in the real world.
This is possibly why the band Radiohead (and Nine Inch Nails before them with “The Slip”) felt comfortable giving away their last album “In Rainbows” online as a download — consumers were allowed to pay “whatever they want,” including nothing, for the new recording. The result: a big boost in Radiohead’s back catalogue, plus huge concert revenues. Rather than robbing their own pockets, the giveaway boosted brand loyalty. Prince did a similar thing a few years back, releasing his album “Planet Earth” as a free giveaway in London’s tabloid Daily Mail. It worked: millions of copies were scoffed up. The newspaper sold more copies, and Prince sold out a dozen live shows in London that month. What Prince and Radiohead may have earned, instead of CD sales and profits, was good will: a kind of mercurial quantity that is measured by how up-to-date your thinking is. By taking an anti-profit stance, they may have increased their true market value.
For someone in the magazine business — a real-world business threatened by online freeaholic habits — Anderson is strangely embracing of the whole “free” thing. Better to embrace than rail in bitterness, I suppose. He thinks that putting newspapers online for free is not “trading analog dollars for digital pennies,” as one editor put it. The industry (or rather, individual newspapers) just need to find the right mix of entrepreneurship and market connection to turn a profit again. Anderson firmly believes this will happen.
On the subject of illegal music downloading, Anderson allows that one product — recorded CDs — may take a beating thanks to piracy. But he maintains that not a single dime is taken out of a single musician’s pocket through pirated music. At most, he claims, it takes away the “potential” sale of a song, which cannot be measured in real terms. This sounds a little like sophistry. On the other hand, he applauds people like Steve Jobs for recognizing that people will prefer to pay a “minimal” fee — 99 cents — for a legal download of a song, because trawling music sites for peer-to-peer MP3s that are often compromised, with bad sound quality, is too much “like working for less than minimum wage.” So there’s a snob appeal to buying something for 99 cents as opposed to “stealing” it for free. Rappers like 50 Cent, on the other hand, adopt a long-range, more philosophical view: “A young music fan can be just as devout and dedicated no matter if he bought or stole” the music.
This brave new world of free is still being constructed. Anderson believes that, ultimately, businesses will figure out how to make “free” things wildly profitable — as contradictory as that sounds. He thinks the market just has to figure out how to “move past abundance to find the adjacent scarcity.” Scarcity is what commands our pocketbooks, you see, in a supply-and-demand world. That’s why musicians now make more money touring than from record sales: they are the non-renewable resource, not the MP3 files.
The revolution that Anderson talks about is mostly online thus far, where technology helps shrink costs (those earlier real-life freebie examples seem some how added to the book as window dressing, though it would be nice to “give away” a free, endless supply of energy, such as wind or solar). And while Anderson cites business models that manage to adapt to a world where free reigns; he doesn’t discuss the hundreds of businesses that collapse due to our current addiction to “free.” Freeaholics will continue to scour for bargains, businesses will try to change up their tactics to adapt to the ever-changing “freeconomic” market, but one thing’s for certain: you can’t keep people down on the farm after they’ve been to Paris… for free.
