If you listen to Chris Anderson, FREE is the new business model to adopt. Chris’ article on Wired! magazine used the Gillette story to propose an age where movies would be distributed free-of-charge to the consumer, and theaters would only make money on the concessions. He mentions Gmail as a free offering from Google, and uses the example of Radiohead giving away their music on their site.

Is FREE really the way to go?

In some ways, Anderson may be right. In the dating-sites arena, Match.com is more popular than their more effective and more thorough competitor eHarmony.com simply by costing less. And OkCupid.com is wildly popular by virtue of being FREE (mind you, it also has an awesome algorythm and an excellent approach to customer service. How’s that for “you get what you pay for”?)

Two reasons why Anderson’s vision is onto something:

a) The birth of the Internet has spawned an “entitled” generation, a generation that believes everything should be free, open-source, readily available for download. This is the generation of filesharing, Torrentz, pirate DVD’s, free porn - the generation that attacks as “evil” any organization that clings to the seemingly archaic concepts of intellectual property rights. If you seek to woo this anarchistic, nihilistic crowd, FREE is the way to their hearts and minds.

b) The advent of demand-driven publishing, demand-driven manufacturing and downloadable (NOT packaged, NOT transported) music, movies and books heralds an apparently needful change in the way we think of marketing all these items. The consumer’s perception of value, based on the effort to produce, package, transport, shelf and sell each of these items has been shattered. We seem to be needing a new paradigm for value, a new way to convey to the consumer the initial cost, the idea cost, the R&D cost, the inherent risks, etc. and convey this in such a compelling way that the consumer is with us, not against us, when purchasing from us. We need to break free of the antagonistic consumer relationship and free of the grudging consumer model that currently plagues every sale of music CDs.

However, not everyone is readily bowing to Chris Anderson’s war cry.

Enter Hank Williams, of Why Does Everything Suck. Hank is not thrilled with Chris’ views. Hank makes a very relevant point about the potential impact to our economy if the trend is to pay nothing for digital, intellectual property and pay only for hard goods - which are typically manufactured overseas. Of course, those embracing the flattening of the World would probably love this, but those speaking out for the American worker wouldn’t love this.

One example Hank gives is Microsoft’s Halo vs. Pong:”The fact that you can play Breakout or Pong for free does not cause Microsoft to need to sell Halo cheap. Halo’s marginal cost isn’t any higher than the marginal cost of Pong. The reason it is expensive is because it has unique entertainment value to people.

I believe in this debate there are two key factors to bring to the debate - two factors that neither side is addressing:

a) FREE is not free.
In almost every case of a FREE distribution model, the item being promoted is not without some type of consideration to the item owner. Be it the consumer’s acquiescence to Permission Marketing (See Seth’s book, and give him permission to email you more info), be it the consumer’s enrollment into a data-feeding machine (Gmail builds databases based on our emails), be it simply adding to the numbers of people who use a product (building market-share, which in itself gives the product prestige, legitimacy and thus market value) the fact is that FREE is not equal to “no value to the originator.”  (Hank, I’d like to hear your thoughts on this specifically.)

b) Author Shrugged?
If we keep expecting the authors of books, music, software, entertainment, ideas, philosophies, diets, etc. to give us all their ideas, all their thoughts, all their THINKING for free, then we are precipitating a Brain-strike the likes of which could shake the World. Ayn Rand wrote about a similar crisis in Atlas Shrugged.

People deserve to be compensated for their efforts. Genius should be rewarded. Talent should be rewarded. Sure, shrug off the moochers and middle-men who have plagued various intellectual-property industries, hiking up the cost to the consumer while not adding value to the originator - BUT: respect the creators. We need the creators of ideas to keep THINKING. How many iPods would you expect in the future if we all did not proclaim our love and admiration to its creators with our wallets and credit cards?

I’m thinking FREE may be a good model when it means NO CASH OUTLAY to the consumer but it ALSO means contribution of some other type for the product or service’s creators.

What are your views?
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