Search results matching tag 'the long tail'

Critics take a swipe at Chris Anderson's new book

255762 — Thu, 02 Jul 2009 08:35:00 GMT

Chris Anderson is not having a good week. It's open season on the Wired editor-in-chief who earlier this week suffered an assault by Malcom Gladwell in the New Yorker. Today it is the turn of the FT and its message is clear: "Free does not live up to its billing".

Gladwell kicked off an East Coast versus West Coast face-off with his New Yorker piece earlier this week, but you know without the hollow points, in a damning review of Chris Anderson's new book 'Free: The Future of a Radical Price' his follow up to his best seller 'The Long Tail: Why the Future of Business is Selling More of Less'.

First up, the New Yorker writer dismissed Anderson as a technological utopian who had got it wrong.

"It would be nice to know, as well, just how a business goes about reorganizing itself around getting people to work for 'non-monetary rewards'. Does he mean that the New York Times should be staffed by volunteers, like Meals on Wheels? Anderson’s reference to people who 'prefer to buy their music online' carries the faint suggestion that refraining from theft should be considered a mere preference. And then there is his insistence that the relentless downward pressure on prices represents an iron law of the digital economy.

"Why is it a law? Free is just another price, and prices are set by individual actors, in accordance with the aggregated particulars of marketplace power. 'Information wants to be free,' Anderson tells us, 'in the same way that life wants to spread and water wants to run downhill.' But information can’t actually want anything, can it? Amazon wants the information in the Dallas paper to be free, because that way Amazon makes more money. Why are the self-interested motives of powerful companies being elevated to a philosophical principle?"

Today John Gapper in the FT has a crack at Anderson and his argument that "there really is a free lunch. Sometimes you get more than you pay for" although he says early on it is unfair to dismiss Anderson as a "digital utopian who is in intellectual and financial hock to Silicon Valley companies".

He argues 'Free' is more than propaganda for the West Coast software firms and venture capitalists, who have made their money and hope to make more out of being free although to be fair some have made it by charging you $2000 for a shiny laptop with a picture of a piece of fruit on it.

Gapper says the book is largely insightful. He describes it as "steady and scrupulous analysis of the past and present of free products and services" all at a time when newspapers, who are after all part of this "free revolution", are going out of business faster than you can say "free lunch" as the reporters whose jobs are going (thousands this week alone in the US with Gannett and in the UK with Trinity Mirror) could sure use it.

To borrow from Shakespeare "the fault, dear Brutus, lies not in our stars but in ourselves". The same appears to be true of Anderson. It is not in his writing, which is as engaging as ever, but in the very nature of his sweeping arguments.

Gapper says the problem is that Anderson veers between sweeping statements and balancing paragraphs in a manner that leaves the reader unsure of what he is actually saying.

"It is an intellectual version of a ride in a New York taxi whose driver alternately pumps the accelerator and stamps on the brakes.

"Early on, we learn: The new form of Free is not a gimmick, a trick to shift money from one pocket to another [like razors and blades]. Instead, it's driven by an extraordinary new ability to lower the costs of goods and services close to zero. While the last century's Free was a powerful marketing method, this century's Free is an entirely new economic model'.

"That is a big claim and it never really gets substantiated, at least not at the scale of Mr Anderson's rhetoric. Actually, quite a bit of what he claims to be new appears really to be the virtual equivalent of 'buy one, get one free' or the cheap subscriptions long offered by US magazines."

Gapper goes onto argue that Anderson's vision has two flaws: first, as Hal Varian, Google's chief economist, has pointed out, network effects unleashed by digital technology tend not to spawn free competition among equals but a "winner takes all" effect in which a single company emerges with all the spoils. In the software era, that company was Microsoft; in the internet era, it is Google.

"The second flaw is that, even if the cost of digital distribution is lower than that of physical distribution, the marginal cost of production is not cut to zero. Companies have many costs, from marketing to employing people to make things. Offering things free on the internet is loss-leading just as surely as handing Jell-O recipe books to American housewives was in 1904."

Whatever happens we are all going to be reading this and I for one am looking forward to hear Anderson answer some of these critics tonight "Free–The Future of a Radical Price" 2 July Royal College of Physicians".

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Was Wired's Chris Anderson a smack dealer in a former life?

2182355 — Mon, 09 Feb 2009 15:16:00 GMT

Wired magazine's US editor-in-chief has some forthright, and well-judged, views on life and, more specifically, the changing business landscape in the digital age.

His best-selling book, The Long Tail - which espoused the value to be tapped in the multitude of niches within the market - is soon to be followed by his next foray (Free - an exploration of the ‘radical price point of zero').

Speaking on Friday, at a Conde Nast-organised Wired seminar, Anderson, interviewed by UK Wired editor David Rowan, talked, among other things, about what "free" means for businesses - and in the crudest terms, it seemed to boil down to getting people hooked on a free, possibly inferior version of your product, then charging them for the good stuff. Sound familiar? It's a model much loved by drug dealers on many of our less-salubrious estates.

Explaining in more detail, "free", in this instance, can't mean you give everything away for free. While the nature of the internet is driving the price point to nothing - falling storage, server and bandwidth charges - a purely ad-funded model is still not a good idea in the current market. Companies, said Anderson, are shifting their model to direct payment - they want to be cashflow positive now

What he suggested is that businesses need multiple versions of their products, in order to give away free to the majority, but get about 5-10% of people to pay for the same content or a premium version of it.

In Wired terms, Anderson explained, this means giving the content away online for free, but getting people to buy the magazine. Sounds easy enough, although this week's ABCs will show the last bit is a little trickier in reality.

The "freemium" model - some free content with premium services paid for - is already operated by a few major publishers, The FT being the obvious UK example, and is how Anderson sees the future of content provision being funded. The Wired model, free online content but a paid-for print version, is pretty much what every remaining publisher adheres to. But at the moment, for many, this latter iteration of the "free" model is not working.

Removing the ‘walled garden' and offering total open access, relying solely on ads for revenue has been the rallying cry of the majority of traditional publishers as they charge headlong into the digital age.

The fact they are all are finding it tough to replace the lost print advertising and circulation revenues by generating cash from even huge online audiences makes either of Anderson's suggestions (free online and pay for print, or some free online and some paid for) a little hard to square for everyone in media who's currently struggling.

"Getting someone to pay for something they love is a nice problem to have," said Anderson on Friday. Unfortunately, driving prices higher at any time, let alone in a recession, and let alone from free to paid for, is not an easy task.

Anderson has a well-deserved reputation as a deep, solid thinker and it would be unfair, and a mistake, to prejudge his Free book on the basis of a half hour interview, in which it wasn't even the main topic.

But, it does feel as though free is just how it is. There is no going back for publishers. There is no chance that people will start to pay for something they've enjoyed for free for so long. And there's not much, if anything, in terms of information, that an average consumer is now, or will be in future, willing to pay for.

Which only begs the question, if the ad-funded model doesn't start working, and people aren't prepared to pay for information, how are media businesses ever going to fill the revenue void?