FREE: Wired's Chris Anderson explores the Divide-By-Zero problem in the Long Tail

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6 Responses to “FREE: Wired's Chris Anderson explores the Divide-By-Zero problem in the Long Tail”

  1. Angstrom says:

    @Jeff

    if I take that free digital music, use it in some interesting way, then make money off of it, then it has magically become a product again.

    When you take some music and use it for something to make money – you need to apply for a special license to do so (from the music creator). That license is where most money for musicians now comes from. We don’t really get cash directly from end users, but instead we get cash from licensees of our ‘music making service’.
    Typical licensees being film makers, TV companies, public institutions, corporations, etc.
    They don’t own our product, they just have a right to use our music making service to generate revenue.

  2. Kid says:

    “…In 2006, the site earned an estimated $40 million from the few things it charges for. That’s about 12 percent of the $326 million by which classified ad revenue declined that year.”

    Is that a vaporization of value?

    Basically, if every product is seen as a composite of free and premium versions, it means that more and more items are taken out of the premium version to the free one, as the premium features become more and more of a commonplace.

    In a way, it is pretty much the same trend of luxury items turning into commodity, but happenning much faster. A stone knife used to cut things used to be luxury (or even rarity), but now you can get a pile of plastic knives from any fast food places for free.

    My optimistic side of the brain tells me that the vaporization of value is great for setting the foundation for more advanced products to come in future.

  3. Adam H says:

    For some great related points, see Kevin Kely’s recent Technium post. “Better than Free”

    http://www.kk.org/thetechnium/archives/2008/01/better_than_fre.php

  4. Downpressor says:

    It is reasonable to say that digital goods are a service in that entertainment is a service. Whats being sold is the opportunity to experience the entertainment. Its really the same selling a physical container for the experience (CD, DVD, paperback, etc) but proponents of net.think mostly ignore this as a way to claim that “everything is different now”.

    I just cant swallow the koolaid on most of this thinking. Even something thats given away costs something to make available and whether or not DRM reduces value is a subjective matter to which not everyone agrees. Zero cost to customer trials of product have been around for ages with the assumption that the loss leader will demonstrate the quality/value of the product and lead to later sales. Even Yahoo/Google arent really giving away anything for free, just like the TV networks, they are making something available in exchange for the ability to present their users with advertising or the chance to gather data on their users which may be sold on at a later date.

    To my eyes Chris Anderson doesnt really have a great track record on the topic of reality based economics, but I’ll see where this goes, if it is really an exploration of ideas or just more koolaid

    Maybe in the long run I’ll have egg on my face for thinking this kind of thing, but if that day comes I’ll be the first to admit I was wrong.

  5. ditda says:

    Mike Masnick over at Techdirt has some great analysis on the economics of free:

    http://www.techdirt.com/articles/20070110/004225.shtml

    (Technically there is a series of articles, but it’s rather difficult to find them in order. I linked to one of the first that I found.)

  6. Jeff says:

    So, anything you can get for free (such as mucic), is not a “product” but a “service.” Isn’t that symantic confussion? The digital copy may not be a thing you paid for, but it most certaintly is a product that has been provided by a free service. And, if I take that free digital music, use it in some interesting way, then make money off of it, then it has magically become a product again. Magic being the ultimate reality, I guess.

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