The Free Economy

I began the year with a TV appearance on behalf of Storynory, our podcast that offers free children’s stories. Funnily enough I wasn’t on CBBC - the kids’ Channel - but CNBC - the Financial News Channel. I was there to talk about the ‘The Trend to Free” in 08.

The Free Economy is something that Chris Anderson, the author of the Long Tail, is working on for his next book.

I wasn’t their everyday sort of guest. In the Green Room there was a little box to leave your business card. It was full cards left by analysts, venture capitalist, and economists. I dropped in mine with picture of a story-telling frog on it.

I was supposed to have 5 minutes on the Power Lunch Europe show, but the guy before me over-ran his rant about the NYMEX. So I had 4 minutes to explain the trend to free. The interviewer was great, but there wasn’t time to say a lot of the things I had planned. There’s stuff going on that isn’t just about cash flow, and it’s about a lot more than advertising moving online.

But a good thing about a blog is that you can say what ever you like. Here are some of the points I wanted to make about Free on the Web:

The web is a very idealistic place - and some organisations like the Wikipedia and Mozila give away their products out of sheer altruism. The commercial companies have to contend with this free-for-all ethos. Who cares about Encarta or Encylopedia Britannica any more?

If you want to build a big website, your content has to be free. If your content hides behind a credit card form, the search engines can’t see it. The reason the BBC and the Wiki are big on the web is because they have thousands of high quality pages that come up in searches.

Given the altruistic and cooperative nature of the web, people tend to link to free resources, rather than overtly commercial ones.

In the old days free led to the question “where’s the catch?” but the web is a voting machine that rewards integrity - so free has to really mean free.

Google launches a free product practically every week. Some of these are amazingly high value - take SketchUp the 3D, modeling software, or Google Earth that has detailed satellite pictures of the globe previously available only to defense departments.

Most of Google’s products don’t make them money - but they do earn it love and good will. These are vital to a company that is so dominant because a regulator making his or her career is more likely to start an anti-trust suit against an unpopular company - such as Microsoft. The free products, such as gmail, help Google worm its way into your life and become an essential part of it. They also niggle Microsoft, which it is always happy to do..

Many people build their reputation by giving their time to the web free of charge. Some build software - occasionally with enormous impact - and they do well out of it. Linus Torvalds is hardly unemployable, although he gave his youth to Linux. Others write or record media content. For a professional, a high reputation is the key to their success - so they don’t really need advertising. Quite frankly, most authors and musicians could also benefit from giving away their material. The great majority aren’t making any money from selling their works - only the top few do that. They had better face up to that, and start working on giving away their material, and building a following. It’s a long hard slog, but it’s the way the world works now.

If you are traditional business all the above is annoying. But if your product can be reproduced at minimal marginal cost you had better face up to the facts. Newspaper publishers are now coming round to giving away their content online - and even on the train in the form of free papers. And oddly enough, the ones who have seen that free is the future are doing rather well.