Free: The Future of a Radical Price

Chris Anderson got the world’s attention by writing the bestseller The Long Tail: Why the Future of Business Is Selling Less of More, where he describes the economic logic behind some eCommerce sites that sell an immense variety of goods instead of focusing on just a few.

In his next book, Free: The Future of a Radical Price, he discusses the free (as beer): why people are so moved by free stuff, and how offering something for free might be a great deal. He gives you a brief and interesting history of the free merchandise, gives several theories (which is the main focus of the book), and several examples that happened in real life.

It has some common aspects with the first book: economies of scale and marginal cost/revenue. He shows that if an item’s cost is too small, you might consider it zero. Imagine HD space: since the price is constantly dropping, a company might consider it irrelevant and gives their clients unlimited space for free. It is not free for the company, but the actual cost is so low that it will not affect your profits in a relevant matter, but will generate an enormous impression for the clients.

Not Too Small to Matter, but Too Small to Meter

The author is prudent enough to not advocate free as a messiah. He believes, in fact, in the idea of Freemium, in which the product is offered as free for most users and a small fraction will pay for a premium offer.

Anderson eats his dogfooding by releasing the book for free as a pdf while the physical is paid for. The audiobook can also be found in a free version and is very curious: the full version, which is the complete book, is free while the compact version is paid. Time is money and the compact version saves you time but not money.