Are we living in a “FREE” economy?
I downloaded Chris Anderson’s “Free” (for free) but haven’t yet turned the first digital page. I look forward to reading Anderson’s thoughts on the future where prices are driven to zero as productivity increases and input prices decrease at an exponential rate. Anderson is testing his hypothesis by providing his new book, the hardback version of which will fetch upwards of $25, gratis through Amazon’s Kindle service. It will be interesting to see retail sales since it can be downloaded legally for free. Samples have always been an important marketing and sales tool, but Chris’s book is not a sample - its the full monty. Chris’s model is more akin to bands who play free concerts in order to sell records, paraphernalia, and tickets to future bookings. Chris can make just as much money or more from the free press (pun intended) garnered from such benevolence. For instance, I am sure sales of his *revolutionary* bestseller “The Long Tail” are going through the roof. Remember, however, that there is a huge chasm between free and $0.99 whereas additional price increases have less marginal effect on demand. Tapulous COO and co-founder Andrew Lacy said install rates for one of its free gaming apps dropped 95 percent overnight when the company started charging 99 cents for it. So if you are going try this tactic you have to go all the way, but make sure you have a monetization plan. If its free with no plan, you will not make any money. That won’t work now or in any future.
* As Amazon calls it in their editorial review of “Free”. They are trying to sell the bundle of “Free” and the “Long Tail” for $39.11 which is 5% off the retail prices of the two. I imagine the code just says where an author has multiple books for sale, bundle whatever item the user is viewing with the most similar or best selling item from the same author and knock 5% off. They clearly need to re-write the algorithm when one of the products is being given away for free.
