4 Kinds of Free

“Free is the business model for the 21st century”

As Chris Anderson says in this podcast.

He talks about the economy of abundance and how the ways of giving free products away is changing.
For a long while producers have given consumers free products. An example of this the way phone companies will give a free phone with a subscription. Yet the phone companies can’t just give way free phones without strings because they cost quite a lot to produce. so they make you sign up for a subscription in order to get one.

But recently the nature of free products is changing.
The thing that is changing is the cost of production. Today many products can be pruced digitally. A music file or a pdf book can be copied at the click of a button. Since the price of computer power is falling exponentially, the price of producing products digitally is also decreasing. Already today it has reached the point where the duplication of music, images or text is virtually free.

With the practically free marginal cost of digital product, there are a lot more possibilities to use free. Since it costs me close to nothing to release a digital product, I have to to attract a lot less revenue per free product.

In the increasing interest around business models with free, Chris Anderson talks about 4 different kind of free.

Free 1 Is where you one product free, when you pay for another.
An example of this is the way you can get a cell phone for free with a subscription.

Free 2 Is when a free product is supported by ads.
An example of this is the Metro newspapers that are distributed for free in many countries.

Free 3 Is where the company gives away a lot of free products, and makes money from selling complimentary or premium products. One example of this is skype, that lets hundreds of millions of people use a free product, then to sell a few of these premium products.

Free 4 Is where a person gives a piece of work as a gift.
An example of this is the work done on wikipedia.

(The reason I quote Chris Anderson so much, is that he will most likely be the one defining the way we talk about free. In an article in Wired in 2004  and later in his book “ the long tail” Chris populised the idea of a marked of nices. His great work in creating a termenologi and explaining the concept caused these to set the standard for how people talk about the area. Next year he will publish a book about free, which will probably set the tone for the way people talk about the area.)

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