The Politics Of Free – Why Giving "Stuff" Away Is An Interesting Business Model

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Over at the top of the Studio 360 website on their segment about the state of arts journalism, there’s a quote by me that says that the best business model right now is to give away as much “stuff” as you can. Okay, a bit inelegantly expressed, in the course of a long audio interview for the show. You can hear the full segment here:

But the idea isn’t new. And it’s not mine. Cory Doctorow has long been a proponent of the business model of free, and he gives away his books. Why?

Giving away ebooks gives me artistic, moral and
commercial satisfaction. The commercial question is the one that comes
up most often: how can you give away ebooks and still make money?

For me — for pretty much every writer — the
big problem isn’t piracy, it’s obscurity (thanks to Tim O’Reilly for
this great aphorism). Of all the people who failed to buy this book
today, the majority did so because they never heard of it, not because
someone gave them a free copy. Mega-hit best-sellers in science fiction
sell half a million copies — in a world where 175,000 attend the San
Diego Comic Con alone, you’ve got to figure that most of the people who
“like science fiction” (and related geeky stuff like comics, games,
Linux, and so on) just don’t really buy books. I’m more interested in
getting more of that wider audience into the tent than making sure that
everyone who’s in the tent bought a ticket to be there.

 Marketing guru Seth Godin has also figured this out with his books:

Seven years ago, I wrote a book called Unleashing the Ideavirus.
It’s about how ideas spread. In the book, I go on and on about how free
ideas spread faster than expensive ones. That’s why radio is so
important in making music sell.

Anyway, I brought it to my publisher and said, “I’d like you to
publish this, but I want to give it away on the net.” They passed. They
used to think I was crazy, but now they were sure of it. So I decided
to just give it away. The first few days, the book was downloaded
3,000 times (note: forgive the layout. It’s not what I would do if I
was doing it today). The next day, the number went up. And then up.
Soon it was 100,000 and then a million. The best part of all is that I
intentionally made the file small enough to email. Even without
counting the folks who emailed it hundreds of times to co-workers, it’s
easily on more than 2,000,000 computers. I didn’t ask anything in
return. No centralized email tool. Here it is. Share it.

A Google search finds more than 200,000 matches for the word
‘ideavirus’, which I made up. Some will ask, “how much money did you
make?” And I think a better question is, “how much did it cost you?”
How much did it cost you to write the most popular ebook ever and to
reach those millions of people and to do a promotion that drove an
expensive hardcover to #5 on Amazon and #4 in Japan and led to
translation deals in dozens of countries and plenty of speaking gigs?

It cost nothing.

The software industry has largely moved to a free model. Open source software runs some of the biggest websites. The Apple Apps model now is to offer a free version of an app, hook a large user base for it, and build a market for a paid upgrade. Public radio is largely a free model. Hear the program for free, but if you use it and like it, please consider becoming a paid member. Millions do.

Who can afford to give away what they make? If you’re Bruce Springsteen and sell every ticket, you don’t need to. If you’re Radiohead and you want to experiment, you give away your new album online, then hope real fans pay for the hard version.

The Internet exploded with Radiohead-related chatter. In the three days
after the announcement, blogpulse.com, a search engine that reports on
daily blog activity, showed more than a 1,300 percent increase in the
number of posts mentioning the band…

A year after the release of “In Rainbows,” the big numbers started to
roll in. The album had sold 3 million copies, including downloads from
radiohead.com, according to the band’s publisher, Warner/Chappell. The
sales from the band’s website alone exceeded the total sales for the
band’s previous album, “Hail to the Thief.” The figures included
100,000 limited-edition box sets, sold at the U.S. equivalent of $81 –
an $8 million haul, with the band keeping most of the profits. The
publicity windfall helped ensure one of the most successful tours of
2008, with the band playing to 1.2 million fans.

The point is to build a base of people who care about you and what you’re doing and then give them reasons to pay you.

Tomorrow: Politics of Free, Part II – why a larger audience with lower sales beats a small audience who pays a lot.

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