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Free…

And so the debate rages on Chris Anderson’s new book. Looking forward to reading it.

The thing that gets me is the notion that “The cost of the building blocks of all electronic activity—storage, processing, and bandwidth—has fallen so far that it is now approaching zero” is a truism. Really?

I pay a small fortune for a DSL line… even more for ATT.. then I’m surrounded by systems, storage, displays, TVs, Kindles… all of them priced in the many hundreds of dollars. Actually, what we have going on here is an attempt by the hardware makers (Amazon Kindle) to subsidize their hardware by dominating the margin in content. They are simply attaching a new profit pool and looking to create a virtuous circle inside the customer relationship – which they now hope to own. Nowhere does “free” feature in this equation.

For the maker, there is no question that the irrevocable march of technology is driving distribution costs down. But rather than pass those costs on to consumers what seems to be happening is that the new entrants are absorbing the prior profit pool.

As much as I am looking forward to the book I’m also fearful I’m going to read another tome by the technology elite who seem to be swimming in free while the rest of us pay. The reality is that a $300+ Kindle + books at $9.95 don’t equal free.

Second, “free” is relative and a product going “viral” via it being free is just one strategy. “Coolness, for instance, could also result in a viral swarm. As could word of mouth. Free is absolutely a distribution and marketing strategy but it isn’t a business model. That is, unless you plan to make no profit.

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