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As Kent Anderson mentions in his post Gladwell & Nielson: The Fixed Costs of Fixed Ideas, Malcolm Gladwell’s review of Chris Anderson’s forthcoming book, “Free: The Future of a Radical Price” has sparked some intense debates.
Many of the arguments have been captured on this Squidoo lens started by Seth Godin.
What strikes me about the debate is that, like most debates, it’s occurring at the logical extremes of the scenarios (it’s all or nothing). Yet, when the dust settles on most debates, reality usually falls between the extremes.
Let’s turn the clock back to the late 1990s–Y2K was coming, and the Internet boom was in full swing. The mantra then was that brick and mortar was a thing of the past to be replaced by the dot coms. Late in the “dot com era” some started to see holes in this theory, stating that blending the models would be more likely than one model replacing the other. In fact, some started to think that online-only retailers would be at a disadvantage to brick and mortar retailers that had an online presence and effectively integrated the customer experience.
Then a funny thing happened right around the turn of the century–for lack of a business model (sound familiar), most online only ventures (with notable exceptions like Amazon and eBay) started to crumble.
Now, back to the subject of paid content. It seems logical that several pricing scenarios (free, paid, sponsored, hybrid, not yet discovered, etc.) have a place in the new economy. The problem is that we don’t have the rules, guidelines, or models that predict how consumers may behave given the many variables that impact their decision making.
In essence, our established markets have reverted back to behaving like emerging markets.
What do you do in emerging markets? Make many small bets and keep experimenting until the trends start to become clear.
As more information becomes available about how our customers are behaving, I’m willing to bet “free” will be a significant part of the landscape but will not be the only pricing model in the market. I also doubt that many of the paid models that exist today will survive unscathed.
So, if your business is selling content, I would highly recommend that you don’t put all of your eggs in either the “all free” or “all paid” basket.
Instead, keep an open mind, and keep experimenting.
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Discussion
2 Thoughts on "Playing Two Ends Against the Middle"
Highwire’s John Sack recently sent around this link, to a New York Times article on Anderson where he essentially confirms what you’re saying here:
But after beating the drum for giveaways throughout most of his book, Mr. Anderson eventually acknowledges that his idea is in fact not viable. Such are the perils of his sloppily constructed sweeping argument. No, he doesn’t envision an economy based entirely on giveaways. “Free may be the best price, but it can’t be the only one,” he says. He advocates the balancing of differently priced versions for different markets, acknowledging that this tricky balance is not easily achieved.
In reading more about this, what Anderson seems to be advocating is Freemium, which is the blending of “Free” and “Premium” – give some away to many and add features/content needed to get paid by some (likely a relative few compared to the number that use it for free). It is a blended model and that makes sense. But he spends so much time discussing the Free part of Freemium that it looks like he’s advocating ONLY free.
This is compounded by the trend for those that join the discussion to argue only the extremes.
It also doesn’t help that “media personalities” are the ones fighting it out online – that’s enough to degrade any discussion!
