Chris Anderson talking about “Free” (as in free beer)
During these past Xmas holidays I caught up with some tasks that were waiting on my growing TODO list. One of them was watching Chris Anderson speech at the Nokia World 2007 in Amsterdam last month (slides here), where he presented some of the ideas included in his new book, entitled ‘Free’, following up his past book, The Long Tail.
In his speech, Anderson explained what disruptions happen in the economy when some basic goods become free or almost free (such as electricity, IT infrastructure or access to information) and what new markets and business models generate from there. It is particularly interesting the list of business models arising from a market of free goods and services (where open source is definitely included in most of them), such as:
- Cross-subsidy: give away the razors, sell the razor blades; or give away music and sell concert tours; or give away the bits and sell the services; or give away flight tickets and sell other tourist services (food, hotel rooms, car rentals, …); or give away a computer game for free and sell virtual land, characters or items in the game, …
- Ad-Supported: magazines, newspapers, blogs, …
- Freemium: 99% use the free version, but a few pay extra for a premium version; Skype is in this category and so many other dual-license based open source products
- Gift economy: give people an opportunity and a platform to contribute, like Wikipedia or most of community based projects
Another idea that I also found interesting was that every abundance creates new scarcity. Although old scarcities such as time and money are still scarce, there are new ones on the table: attention and reputation. There is only so much attention and reputation available in the world. On an Internet economy, attention can be measured by web traffic and reputation by incoming links.
As you can imagine, a 45-minute presentation is not enough to discuss all these new ideas in depth, but the thing I liked the most is that they show a clear pattern replicating among businesses in very different industries and markets, but which make Internet a fundamental part of their activities. Now I have a bunch of good examples that will help me explain the basics of open source business by explaining other well-known cases such as Ryanair, Second Life or the Artist Formerly Known as Prince.
