In his New York Times bestseller, The Long Tail, Wired magazine's editor in chief provided a glimpse of the business future that's already here. And now, in Free, he does it again.
As the cost of doing business online drops closer and closer to zero, giving things away is not just becoming an option--it's inevitable. But if the product is free, where's the revenue? In Free, Anderson breaks down the priceless economy into six broad categories, demonstrating how to make money in each:
- "Freemium": Free Web software and services, and some content, to users of the basic version. (Think Flickr and the $25-a-year Flickr Pro.)
- Advertising: Free content, services, and software to an audience that advertisers will pay to reach.
- Cross-subsidies: Give away any product that entices customers to pay for something else. Example: It's a free second-gen Wii But only if you buy the deluxe version of Rock Band.
- Zero marginal cost: Anything that can be distributed without an appreciable cost to anyone, like online music.
- Labor exchange: Performing tasks to gain access to "free" sites and services.
- Gift economy: From Freecycle (free secondhand goods) to Wikipedia, money isn't the only motivator.
In Free, Anderson uses the fundamentals of economics, a long view of the history of business, analysis of today's rapidly changing landscape, and fascinating predictions to create a book that, like The Long Tail, will be essential reading in the years to come.
- In hardcover, The Long Tail had lengthy runs on the New York Times, USA Today, Publishers Weekly, Book Sense, Wall Street Journal, San Francisco Chronicle, and Los Angeles Times bestseller lists, and has sold200,000 copies.
- Like The Long Tail, Free began as an article in Wired--in this case, as a controversial cover story. Anderson has also been discussing the book's progress on his widely read blog thelongtail.com.
- As editor in chief of Wired and author of The Long Tail, Chris Anderson is one of America's most sought-after commentators on tech trends.

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Books > Business & Economics > Money & Monetary Policy

'Long Tail' author takes a free ride

When Chris Anderson wrote his first book, 2006’s The Long Tail, he made some of his research, ideas and conclusions available free to readers of his blog. He was rewarded with thoughtful feedback and questions, not to mention a ready-made audience for the book. His new book, Free: The Future of a Radical Price, takes a page from that experience via case studies with a foundation of free, plus a tour through the history and psychology of “freeconomics.” By “free,” Anderson doesn’t mean gift-with-purchase; he means no-strings-attached giveaways that reap rewards through sales of other products or services, or information that can be used to build brand and customer loyalty.

The author, whose day job is editor-in-chief of Wired (available free online), explores print advertising models and their new online counterparts and also describes strategies employed by pioneers and modern-day masters of free-centric business models. For example, in 1904, Jell-O created demand for its strange new product by giving away recipe booklets; in 2008, science fiction writer Neil Gaiman offered for four weeks a free download of American Gods. Obviously, Jell-O’s strategy worked, as did Gaiman’s: American Gods became a bestseller, and independent-bookstore sales of his other books increased by 40 percent.

Also valuable: a willingness to take risks in pursuit of capturing the attention of media-savvy, demanding consumers with Web-centric lives. Anderson writes, “If you’re controlling scarce resources (the prime-time broadcast schedule, say) you have to be discriminating. ... But if you’re tapping into abundant resources, you can afford to take chances, since the cost of failure is so low.” Sections like “The 10 Principles of Abundance Thinking” and “50 Business Models Built on Free” will help readers grasp (and apply) freeconomic principles, while sidebars such as “Why do free bikes thrive in one city, but not another?” ask and answer intriguing questions. As with The Long Tail, Anderson has crafted an edifying, entertaining read—one that will be exciting and useful for readers looking for a fresh approach to business.

Linda M. Castellitto writes from North Carolina.