If you needed something to wring your hands about on a Friday morning, consider Chris Anderson’s feature in Wired on ”Why $0.00 Is the Future of Business.” His premise is that when most products or services meet the web, they will eventually be ”free” to the consumer. Says he:
Basic economics tells us that in a competitive market, price falls to the marginal cost. There’s never been a more competitive market than the Internet, and every day the marginal cost of digital information comes closer to nothing.
I put ”free” in quotes, because, in fact, we end up paying somewhere along the line: whether with our time and attention for on-line advertising, with our connectivity spending on broadband, cable television, and mobile phone service, or with our upgrade purchases for premium editions of what we’re getting for free.
The smart folks aren’t complaining about the new normal, but rather exploring new ways to capture money from things that ”want” to be free. Consider the band Nine Inch Nails, who released the first nine songs from their recent album free on the web, and charged $5 for those who wanted all 36 tracks. Or, you could pay $10 for the CDs, $75 for the ”deluxe edition,” and $300 for the ”ultra-deluxe limited edition” version (which sold out the 2500 copies available). The result as been over $1.6 million in sales, against no intermediary costs (they self-released).
The strategy was to charge premiums to the fans willing and able to pay, and manage the costs to maximize profits. Sounds like what performing arts centers do now when they ”scale the house” at different prices, and offer special events for big donors. But likely to evolve from there.
If you’re looking for ideas on the subject, Steve O’Here at the ”Last100” blog posted five alternate business models for the music industry last October, some of which might apply to the live performing and visual arts, as well.
Will place-based, off-line activities ever be free? In some ways, they already are (think public festivals and such). But in an increasingly on-line world, consumers will become accustomed to different ways of paying. We’d best pay attention to our options.
Here at the Isabella Stewart Gardner Museum in Boston, we’ve definitely found value in $0.00. In September 2006 we launched a free classical music podcast called “The Concert,” a bi-weekly program of live recordings from our Sunday concert series. Not only have we gotten tens of thousands of dollars in media value from coverage of the podcast, in high-profile outlets like Fast Company and The Wall Street Journal that are usually out of reach of our concert series, but we’ve also had an over 55% increase in online ticket sales for concerts, and we’ve reached nearly half a million listeners in more than 85 countries around the world, people we never would’ve gotten to without this free program. Our goal was to raise awareness of our series and to get people in the concert hall. By giving away the podcast, we accomplished both, generating a whole lot of value from little investment and without any charge to the consumer.
My question for Chris Anderson: when can I get my $0.00 subscription to Wired?