The cover article in the March 08 issue of Wired details editor Chris Anderson’s point of view on the emerging free economy. Much of this we’ve covered in the pages of PSFK before but if you haven’t quite caught up, do print it out and read it on a train ride sometime. Anderson has done the rest of us a favor by giving us a quick breakdown on the categories of the priceless economy. He says that the opportunities to adopt a free business model of some sort have never been greater. But which one? Here’s his six broad categories:
· “Freemium”
What’s free: Web software and services, some content. Free to whom: users of the basic version… It can take a range of forms: varying tiers of content, from free to expensive, or a premium “pro” version of some site or software with more features than the free version (think Flickr and the $25-a-year Flickr Pro).· Advertising
What’s free: content, services, software, and more. Free to whom: everyone… based on the principle that free offerings build audiences with distinct interests and expressed needs that advertisers will pay to reach.· Cross-subsidies
What’s free: any product that entices you to pay for something else. Free to whom: everyone willing to pay eventually, one way or another… In any package of products and services, from banking to mobile calling plans, the price of each individual component is often determined by psychology, not cost. Your cell phone company may not make money on your monthly minutes — it keeps that fee low because it knows that’s the first thing you look at when picking a carrier — but your monthly voicemail fee is pure profit.· Zero marginal cost
What’s free: things that can be distributed without an appreciable cost to anyone. Free to whom: everyone.
This describes nothing so well as online music… Some artists give away their music online as a way of marketing concerts, merchandise, licensing, and other paid fare. But others have simply accepted that, for them, music is not a moneymaking business. It’s something they do for other reasons, from fun to creative expression.· Labor exchange
What’s free: Web sites and services. Free to whom: all users, since the act of using these sites and services actually creates something of value… the act of using the service creates something of value, either improving the service itself or creating information that can be useful somewhere else.· Gift economy
What’s free: the whole enchilada, be it open source software or user-generated content. Free to whom: everyone… In the monetary economy it all looks free — indeed, in the monetary economy it looks like unfair competition — but that says more about our shortsighted ways of measuring value than it does about the worth of what’s created.
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