Chris Anderson’s book The Long Tail was a hit, back in 2004, causing us to re-evaluate the way the Internet was changing the nature of business. Anderson’s main proposition was that the age of the blockbuster was over, that a growing share of business is coming from niche products, which Anderson calls the tail (as opposed to the big hits which Anderson refers to as the head).
Free is an extension of the case put forward in The Long Tail, although the style of the book is somewhat different. The Long Tail was written in a very journalistic style, but Free is more of a light scholarly work, looking to research and establish Anderson's case more thoroughly.
The main thrust of Free is that in many areas the cost of producing a product or service is close to zero, particular where that service is delivered in what Anderson describes bits (e.g. an online copy of a song or movie). When the marginal cost of a product is zero, or close to zero, the traditional form of economics, which are the economics of scarcity, do not apply.
Anderson uses Google as a great example of where 'free' is going. Google made USD$4 billion profit last year, from just two of its many services, from AdWords and AdSense. Most of Google’s products and services are given away free, for example maps, docs, search, Earth, streetview, Android etc. Google are even paying to put satellites into space in order improve the service they are giving away for free. The business sense for Google is to encourage more people to use the Internet, as this helps their commercial business.
In conducting his analysis Anderson draws a distinction between things made of atoms (e.g. coffee, chairs, and coal) and those made of bits (e.g. computer games, online services, and recorded music). His proposition is that young people, the net naturals, understand that the marginal cost of 'one more' use of a ‘bits’ product is zero or close to zero, so they do not expect to pay to use it.
I found the book really useful and interesting. As an economics graduate, I found the re-working of traditional models very interesting. However, I am not sure this is a book for everybody. The basic proposition is very straightforward. Only people who want to follow the whole argument, and to ‘collect’ the case studies and examples will probably feel the need to read the whole book.
The book has been available free, as an online download, (and may still be available free). However, I chose to buy a copy at £18.99. My reasons for choosing to buy the book were:
- I did not want to read it on the screen, too tiring and I wanted to read it at times when I could not be sure that I would have access to my screen.
- I did not want to print it out as that would be very non-green, and actually quite expensive.
- I work well with the traditional book format, I carry it around and read bits when I have a chance, I read in bed and can simply put the book to one side when I want to go to sleep, and for the purposes of review or research I have developed the habit of writing in the book, which has the great advantage of keeping my notes with the book.
For me, one of the interesting experiments currently being conducted in the area of free is the recent decision by Rupert Murdoch’s News Corp to start charging for all online content. The logic of Anderson’s book is that this decision by Murdoch is doomed to fail. There has to be scarcity and demand before charging for access can work, there is demand, but there is no scarcity for most of the material News Corp are offering.