January 9th 2011

Free. How today’s smartest businesses profit by giving something for nothing. Chris Anderson.

Chris Anderson during his presentation, The Ec...
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Free. How today’s smartest businesses profit by giving something for nothing. Chris Anderson. 2010. ISBN 9781401310325.  I have had this book awhile and, really kick myself for not reading it sooner.  It is outstanding.  Anderson is able to debunk all the chestnuts out there around free as well as spend the time to give you some history lessons on free.  He also experimented with his own ideas on how to place the product out there for free using various methods he put forward.  Very insightful stuff . I especially appreciated his 10 Rules of Free on pp 241 and the review of the range of conversion rates one can expect from freemium on pp 247.  The key insight for me is his comment ( compressed and paraphrased by me)  that:

Price will fall to the marginal cost (in the digital bits case,  free) unless the provider has a monopoly and/or enjoys the network effect such as Microsoft (Office docs) and Facebook.  This supports a winner takes all effect, driving competitors to  very low numbers.   Facebook can not charge for new members because it has value in the network = linking new people all the time. So they will generate revenue from scale – losing with 99 % of the users and making it from a small % of ad revenue.  ( or perhaps – selling stock!)

I see that  Guy Kawasaki and Tim Ferris both used ideas from Anderson in their recent promotions.  Guy generated more “reputation” currency by offering free downloads of the Macintosh Way to people who “liked” his new book facebook page.  Tim Ferris drove buys of the new 4 Hour Body , by offering a pdf of the 4 Hour Workweek to those who bought the new book.  Tim drove his book to the top of Amazon very quickly = increased sales and reputation.

This is the best treatment of free and freemium out there. If you buy this very readible book, read and digest it. It contains numerous money making ideas. Do not treat it lightly! You can get the audiobook still free at Chris’ website:

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