Free!

Free - The Future of a Radical Price is a book by Chris Anderson, editor-in-chief of the well-known tech mag Wired, about how fast-evolving technologies, especially the Internet, have caused production and distribution costs to fall to low levels previously unthinkable. This has given rise to a growing number of free goods and services, challenging the old economic certainties that we are used to, and allowing producers to creatively redefine their markets, package and market their products and reach out to consumers and grab their attention. Instead of talking about the currency "money" as the basis of the old economy, we will be soon talking about the "reputation" economy, and the "attention" economy, currencies which are becoming increasingly scarce and hence much sought-after.

Why do bloggers blog and Twitter users tweet? Not for money but to be heard and known. The challenge later is to figure out how to turn the reputation and attention gained into money. But first, there is no need to worry about a business model. Instead, build something people want and put it everywhere for free. Free is the best way to reach the biggest possible market and achieve mass adoption. The following 10 principles of Free summarise his ideas:

1. If it's digital, sooner or later, it's going to be free. Free becomes an inevitability as price falls to marginal cost.

2. Atoms would like to be free too but they are not as pushy about it. (Atoms being physical products, as opposed to "bits" which are virtual) - Free is so psychologically attractive that marketers will always find ways to invoke it by defining their business to make some things free while selling others.

3. You can't stop free - So businesses should take Free back from the pirates and sell upgrades to regain their market share.

4. You can make money from free - People will pay to save time and lower risk. People will pay for things they love, for status etc. Free opens doors, reaching new consumers. It doesn't mean you can't charge from them. (Hence, it is important to gain a reputation and grab their attention first)

5. Redefine your market - Creatively redefine your business, give away products and make money around them.

6. Round down - If the cost of something is heading zero, Free is just a matter of when, not if. Why not get there first, before someone else does? The first to Free gets attention, and there are always ways to turn that into money.

7. Sooner or later, you'll compete with Free - Your choice: match that price of your competition and sell something else, or ensure the differences in quality overcome the differences in price.

8. Embrace waste - If something is becoming too cheap to meter, stop metering it.

9. Free makes other things more valuable - Every abundance creates a new scarcity. When one product or service becomes free, value migrates to the next higher layer. Go there.

10. Manage for abundance, not scarcity - When resources are cheap, you don't have to manage the same way. Shift from traditional, control management scarcity thinking to a "Fail Fast" mentality.