Last year, I covered Chris Anderson's book [The Long Tail]. This year, Chris Anderson, editor-in-chief of Wired.com, has an upcoming book titled Free, the past and future of a radical price. Chris talked about his book here at Nokia World 2007 conference, and the [46-minute video] is worth watching.He asks the big question "What if certain resources were free?" This could be electricity, bandwidth, or storage capacity. He explores how this changes the world, and createsopportunities for new business models. However, many people are stuck in a "scarcity" modeland treat nearly-free resources as expensive, and find themselves doing traditional things thatdon't work anymore. Chris mentions [Second Life] as aneconomy where many resources are free, and seeing how people respond to that.Rather than focusing on making money, new businesses are focused on gainingattention and building their reputation. Here are some example business models:
- Cross-subsidy: give away the razors, sell the razor blades; or give away cell phones and sell minutes
- Ad-Supported: magazines and newspapers sell for less than production costs
- Freemium: 99% use the free version, but a handful pay extra for something more
- Digital economics: give away digital music to promote concert tours
- Free-sample marketing: give away samples to get word-of-mouth advertising
- Gift economy: give people an opportunity and platform to contribute like Wikipedia
Nick Carr writes a post [Dominating the Cloud], indicatingthat IBM, Google, Microsoft, Yahoo and Amazon are the five computing giants to watch, as they are more efficient atconverting electricity into computing than anyone else. Last month, I mentioned IBM and Google partnership on cloud computing in my post[Innovationthat matters: cell phones and cloud computing].Nick's upcoming book titled[The Big Switch] looks into "Utility Computing",comparing the change of companies generating their own electricity to using an electric grid, to the recent developments of cloud computing and software as a service (SaaS). Amazon's latest "SimpleDB" online databaseis cited as an example.
Last, but not least, Seth Godin writes in his post [Meatballs and Permeability] about the bits-vs-atoms issue, what Chris Anderson above refers to as the new digital economy. The idea here is that value carried electronically as bits (digital documents, for example) have completely different economics than value carried as atoms (physical objects), andrequires new marketing techniques. Methods from traditional marketing will not be effective in this new age.Here is a [review] of Seth's new book Meatball Sundae: Is Your Marketing Out of Sync?
All three of these books seem to be covering the same phenomenon, just from different viewpoints. I lookforward to reading them.
technorati tags: Long Tail, Chris Anderson, Wired, Nokia World, secondlife, cross-subsidy, digital economy, Nick Carr, Big Switch, utility computing, IBM, Google, Microsoft, Yahoo, Amazon, SimpleDB, Seth Godin, Meatball Sundae, bits, atoms