Free as a Business Model

Chris Anderson (blog, wikipedia) author of The Long Tail is writing a new book entitled Free which New York Magazine discusses here.

From New York Magazine:

Long Tail Author Sells Next: Chris Anderson, author of much-cited paradigm-shifter The Long Tail, sells new book Free to Will Schwalbe at Hyperion. Agent is John Brockman. New title explores “the most radical price of all — zero — in the context of the economics of abundance.”Times Magazine editors crack knuckles.

Chris is looking for help with the sub-title in his blog… here is a link to the post.

Kevin Kelly (blog, wikipedia) is also contemplating Free as a business model. He writes a post answering the following question:

When copies are super abundant, they become worthless.
When copies are super abundant, stuff which can’t be copied becomes scarce and valuable.

When copies are free, you need to sell things which can not be copied.

Well, what can’t be copied?

More after the jump…

Kelly describes – what he calls generatives – that are better than free. He defines a generative as:

A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold.

You can read Kelly’s entire post here.

What I find so interesting in this focus on “Free” is that it is largely a reaction to the obsolescence of business models due to the innovative technology developed and perfected (arguably) over the last 20 years. What we are seeing is a whole subset of industries based on scarce hard goods and control of distribution which are now challenged.

What is required is business model innovation – to find the value that consumers are willing to pay for given the innovation that has occurred. Kelly’s genreatives are a nice list upon which one can begin thinking about how to innovate these business models. I’m fairly sure it is not comprehensive and I am fairly certain we will see this list change and expand as time goes by.

The mark of true innovation is that it is able to think beyond what we currently know and rationally try, refine, try again, refine again, etc. until the intended results are achieved. The two biggest challenges are:

  • A culture which is hostile to ideas outside the currently accepted set of practices.
  • The inability to rationally (that is without passion, emotion and “belief” about what we WANT to be true) evaluate the value of what we are trying.

If either of these two conditions exist it will be nearly impossible to effectively innovate.

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