How Today's Smartest Businesses Profit by Giving Something for Nothing

by Andrew Shaffer

16 April 2010

cover art

Free: How Today's Smartest Businesses Profit by Giving Something for Nothing

Chris Anderson


Chris Anderson wrote Free using the free Google Docs, on the free Linux operating system, and over a free wi-fi connection at a local coffeeshop. I even listened to the unabridged audiobook for free at Anderson’s website ( Anderson certainly walks the walk and talks the talk.

Free has now been re-released as a paperback with a new preface by the author. Although it’s been re-subtitled How Today’s Smartest Businesses Profit by Giving Something for Nothing, Free is less a “how-to” business book than it is an economic treatise on the history and psychology of “free.”

Anderson delves into the history of “free” in the modern era, turning back the clock to Jell-O’s free cookbooks in the early 20th century. “Give away one thing to sell another,” he writes, defining the concept of a “loss-leader.” Anderson charts the “radical price” through its evolution to the modern-day digital economy. “Information wants to be free,” the saying goes. He uses basic economic theory to show how software, music, and other digital goods have seen their real prices drop to nothing online. When the cost of distribution is “zero,” the price will follow—whether the sellers of the goods want to see that happen or not.
Free is an important academic work ... with a few caveats.

When Free sticks to the facts, Anderson is at his most convincing. However, when Anderson turns from the history and psychology of “free” to prognosticating about the future of “free,” the author loses some of the steam that he built up over preceding chapters.

For instance, when Anderson seeks to debunk several modern myths about “free,” he uses personal anecdotes and assumptions rather than hard data to make his claims: “This (new generation) is a generation that wouldn’t think of shoplifting but doesn’t think twice about downloading music from file-trading sites.” So the problem of shoplifting has been solved? Are there any studies that correlate offline and online criminal behavior? Alas, there are no footnotes to indicate that this is a valid claim to make – in fact, there are no footnotes or endnotes in Free at all.

Internet bandwidth is free ... except when it isn’t. “No meter ticks as you use Facebook ... Wikipedia costs you nothing,” Anderson writes, arguing that storage space and bandwidth costs are dropping so fast as to be un-metered. Perhaps he needs to speak with cable companies like Comcast, which has capped heavy users’ bandwidth at 250 GB per month. Other North American cable companies have instituted even lower monthly limits, claiming that bandwidth is not abundant (as Anderson asserts), but scarce.

Free: How Today's Smartest Businesses Profit by Giving Something for Nothing



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