Thursday, October 1, 2009

The New Free Attack

An introduction to our Oct. 7 (almost) FREE iBreakfast

When you make something FREE something else becomes valuable. That, according to Chris Anderson, the author of the popular new book FREE, is the secret to fighting against the phenomenon that more and more industries are having to battle: The FREE attack.

The Recording Industry, Newspapers, Magazines and Hollywood have already faced this assault – so maybe we think we’ve learned a thing or two. We know ad-supported FREE (as in get eyeballs and ads will follow) and Freemium (give away the low end so that 5-10% will pay for the high end).

What's worse, according to a study reported in the Silicon Alley Insider - when you get a FREE Attack - you can't have it both ways and be a mix (a/k/a Freemium) you either go completely FREE or completely subscription.

Even as we absorb that message - we also need to look at something new that's coming.

The new FREE ties to together the major themes of the past few years – Social Media, User Generated Media and Open Source – and then turns it on entrenched players. That could be your typical Fortune 500 Company, the Government or you.

Just to be clear, the Internet introduced a kind of growth based on abundance (low-cost bandwidth) and zero-marginal cost – so once a site paid off its ever-lower set-up expenses, adding new customers cost very little. That’s standard digital FREE.

The New FREE is when companies aggregate Crowd Wisdom and particularly, Social Media groups, to go after high value targets. Flat World Knowledge is using this to go after the high value college text book industry: by using professors without typical publishing advances they are able to give away the books to students – and still make money. How long before mobile apps are harnessed in a high value way, like providing a virtual guide or legal assistant – an crowdsourced expert who comes to your phone – and goes after areas where customers are paying for high value information?

It doesn’t have to be completely FREE to qualify for an Attack. Just being so abundant that it is, as Anderson puts it, too “cheap to meter” is good enough. Look what happened to AOL’s hourly charge when the Internet become to too cheap to meter. Could that happen with the hourly billing system at a PR Agency, law firm or even Con Edison, when renewable energy really kicks in?

Abundance has its problems too. Facebook may be FREE but who pays us for stealing my children’s attention for hours a day as they jockey for social standing? FREE email means spam. When 18h Century settlers around the Appalachians learned to grow corn in abundance they soon found the best way to store it was to make whiskey. That lead to oddities like farmers drinking whiskey for breakfast. When the government tried to levy a tax it sparked a rebellion. The solution, as it runs out was Canal and then Railroad transportation which brought the corn to market while it was still fresh.

So yes, where there is FREE there is a solution of one kind or another. It just may not be obvious and it may not come quickly - but its there.

Soon, the tobacco industry and all the governments that depend on their steep taxes will be embroiled in a similar Attack as e-Cigarettes bring on “almost FREE” both in terms of health and cost to this age-old practice.

Barry Diller is latest Media Baron to take on FREE and believes he can get people to pay for content that others expect to get FREE. Maybe he knows something. But as the smartest players have found out, FREE and Paid can coexist in many ways – often reinforcing each other with FREE offering exposure and paid offering quality assurance, times saving, exclusivity and status.

Our next iBreakfast on October 7 will take this whole issue apart at our first (almost) FREE event. It's FREE to members and their guests……..and as our New FREE definition explains, that qualifies as FREE.

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