While I don’t usually enjoy books on economic principles, I do love books on computer history and start-up Internet companies. I loved the PBS mini-series, Triumph of the Nerds and its follow-up about the Internet, Nerds 2.0. Discovering how companies start and sometimes fail fascinates me. (After I write this, I will purchase the DVDs of Nerds 2.0. Perhaps you should as well).
Chris Anderson’s Free satisfies my desire to read about the success of companies in the digital age. A writer for Wired magazine, Anderson offers this seemingly contradictory hypothesis: companies will make money by giving away things for free. He uses two powerhouse companies to frame his argument: Gillette and Google. King Gillette (yes, that’s his name) was a struggling salesman and inventor who come up with a genius idea: give away the razor and sell the blades. Because of this, an entire industry of disposable razors was born. That is why today the razor is free or cheap, but the blades cost two bucks each. Gillette makes up whatever money they “lost” on the lower price of the razor. I suppose this is why heroin peddlers give away the first few tastes for free (not that I have any idea if this is true from personal experience. All my drug-trade knowledge comes directly from The Wire).
Much of the book focuses on Google, as it provides an excellent success story of a company giving away free services (email, search engine, documents, maps, you name it) but is incredibly profitable. Free examines how this works and why.
The essence of free in the digital world is summed up in three commodities that are “too cheap to meter” and they can be given away: bandwidth, storage, and processing. Because these can be given away, companies should find ways to give away services and content.
Music and digital piracy is discussed several times in the book. According to Anderson, if it is digital, it will one day be free. He addresses the discussion of music piracy, and seems to lean on giving it away for free. He uses musician Derek Webb as an example. He gave away music content online if users provide email and a zip code. Using the zip codes, he sent invitations to shows around the U. S. He found that more people were coming to his shows and buying merchandise, making up for the money he “lost” in giving away his music. (This is coincidental, but iTunes is currently playing Derek Webb’s music as I type. I don’t even like Derek Webb. Does he have my zip code?)
I thoroughly enjoyed this book, and it helped me see possibilities for a new economy in the digital age. While I don’t have a business, it still helped me to look for ways in which I can give away content online (this blog, for example) to gain something (your applauding and gushing comments, perhaps).
Most importantly, reading this and The Shallows (see review #31) together makes me be weary of the power held by Google.
By the way, I listened to a free audio book of this work. Strangely enough, when I was at a bookstore last week, I had the temptation to purchase a copy of it to review. Chris Anderson knows what he is talking about!
Here is the Wired article from which the book is based. It can offer an overview of his argument.