DISQUS

Morten Barklund · 4 months ago

I believe this sentence "that it makes it cheaper [...] to search for a song on a torrent site" should be the exact opposite: "that it makes it cheaper [...] than to search for a song on a torrent site".

Otherwise, this is a pretty straight-forward article, even though it completely ignores "real" freedom - the ability to handle what you have in whatever way you like. DRM is an example of reducing freedom, and so is obscure formats, restrictive licenses, hardware lock-down etc.

When I think free, I think freedom - no cost does not in anyway guarantee that. Thus the two sayings "free as in free beer" or "free as in freedom" :)

Regards,
Barklund

Stan_Schroeder · 4 months ago

You're right, corrected that sentence.

About your other point: I had to keep the article within some constraints, so I stuck to one topic. But yes, that's another very important point that calls for discussion.

Fiachra Ó Marcaigh · 4 months ago

Thanks for a great article ("post" doesn't do it justice). There is a lot of clear thinking and powerful logic at work here...

The case for user experience and the cost of poor usability is not often put so well.

DJ NightLife · 4 months ago

Cool post, but what would you suggest to make the user pay in ONE CICK ? There is still the paypal step that takes a few clicks!

gerardmclean · 4 months ago

Good arguments, but go ahead, see if you can implement a one-click payment system on your site without Amazon sending down the lawyers. And see if you can organize media like iTunes without Apple crushing your plans. Lawyers aren't free and neither is innovation which is why the majority of sites will always have product/service fulfillment in the mediocre range; they can't afford to defend against the army of lawyers from large companies protecting their patents. Nobody sues a crowd.

Trent Hamm · 4 months ago

So why doesn't Amazon get into the "one click" business?

gerardmclean · 4 months ago

How so, in licensing the technology? Why? It give Amazon.com another competitive advantage. Why shop at all other book sites is they all have 1-Click? Then check out becomes a commodity; convenient for customers, but commoditizes the stores. To Stan's point, forcing other retailers to make it hard to check out leaves shopping carts abandoned on THEIR sites, but not Amazon. If the customer really wants to buy a book title and Amazon is the only 1-Click option and that is a really, really big deal for me, Amazon gets my business. They get my business for all sorts of reasons as well, but most of my books are impulse buys. Putting more "thinking time" between me and the purchase works against the retailer. Amazon knows this.

If you had a store, how much would you pay to license 1-Click? Most would want to pay nothing and gripe about how Amazon is greedy, etc, etc. Why would Amazon want to deal with that crap? How is that good business for Amazon? It's not.

Dan Petitt · 4 months ago

Just create your site or company in the UK. The Amazon patent is worthless, as it should be, over here ... you cannot patent software (of which 1-Click would be regarded). Although the blasted EU is trying to change that to bring it inline with the stupid American system (http://www.softwarepatents.co.uk/ for more)!

But anyway, doesn't Amazon HAVE to licence the patent on request, they clearly dont need to make it cheap, but I would have thought they would be obligated to.

Although I am no patent or legal expert so treat this comment as pure conjecture. ;-)

Ryan · 4 months ago

Wow. Outstanding article. Thank you for summarizing and putting into words what people have been subconciously understanding for so long.

Tim Mahoney · 4 months ago

It's interesting that we (bloggers, tweeters, etc) write a ton of content online, and don't charge anyone for it. We justify the work we do because we monetize it in another way - consulting services that people find us for, etc.
Comparatively, if I were to start a band, I would do the exact same thing as you mentioned above (start a great web site so people could get my content free) and then monetize it by getting hugely popular (hopefully) and doing concerts for my fans.
The two industries are extremely similar: we're both creating content from little or nothing, and then seeking to monetize it. The "good ol' days" of the music industry are not going away very quickly, but I think artists are taking a harder look at doing it this way.

Ishtar Gate · 4 months ago

Interesting article and the example of Steam really hit home for me, but I'm from India and I want to add a pro-piracy argument that's often missed by the West. People from India and many other nations (Third World mostly) are poor. They cannot afford to buy media like movies, games, music as often as Western nations. P2P, or anything that gives content for free, is a godsend here, and there's availability as well. Media that cannot be found anywhere in real life is available for free on the Internet. Piracy has no issues, it doesn't matter if you're Swedish or Somalian so long as you seed. On the other hand, services like Hulu remain restricted to non-North Americans.

So the whole user-experience-overpowering-price idea is good and all, but that's only in places where price isn't that much of an issue to start with. If someone uses Steam here, people would laugh at them for paying to download something when they can just get it for free, whatever other hassles may be.

gurimAN · 4 months ago

very good argument dan, amazing article

Bonnie Leclerc · 4 months ago

Great (free) article, can't agree more. I made about the same point on my blog some time ago, talking about digital books. I hope minds will change.

fitorey · 4 months ago

Outstanding article. Seriously.

benjaminjtaylor · 4 months ago

Interesting post. In digital, I believe the term free is somewhat of misnomer, people still have to provide personal data, that comes at a cost, opt in or opt out. Chris Anderson is doing some interesting things with Free - Free Kindle version, free on Scribd, free audio. The only thing that costs, is the book, and at $26.99 I'd still be willing to pay. The way in which consumers approach a product free or paid varies.

Mike Murray · 4 months ago

I thought, for a second, that this was going to go into some sort of debate on "Free" health care.

"In the [health care] world, there’s another equally important currency: availability. It can be defined by the number of steps it takes to do something."

Will · 4 months ago

Wow this article stands out among the rest in the discussion of 'free'. I just hope I don't like it so much because I want to believe people will pay for digital goods.

Regarding micropayments, this is so true - kids have no issue paying hundreds of dollars a month (or their parents) for doing text messages but balk at paying $.99 for a song (or in my case guitar lessons).If it happens behind the scenes there would be much less 'friction'.

Unlike many theorists out there I have real data as an online guitar teacher. People have purchased each one of my test products from instantly available video courses/lessons, to a monthly subscription via membership site, webcam lessons. I like to think people are paying to access to me and my experience, which is unique. And I've also noticed an increasing revenue in the free YouTube guitar lessons I do from adsense. Of course the income isn't at the scale I would like it to be yet but the trend is in the right direction.

nyukeit · 4 months ago

Nice article. But it ignores the factual state of the world. Price is not one for everyone. Even if I am ready to pay a price, the Purchasing Power Parity is not the same everywhere. A song on iTunes may be just 99c for Americans, but it still makes it Rs. 50 for an Indian. If what you said has to work, companies need to stop ignoring markets other than US, UK and Australia and start considering a World Market policy. If I know that iTunes provides all songs for 99c in US and 99p in India as well, I would be glad enough to pay for it. Unfortunately, it doesn't work that way.

The theory in the article holds out aptly for windows/mac VS linux scenario though. Though linux is free, it doesn't enjoy wide popularity as windows or mac does. That's precisely because of the experience provided by these two OSes in their entirity (ease of use, application, feel, looks, etc).

ME Living · 4 months ago

This certainly goes like the old adage, "time is money".

Daemon · 4 months ago

Yea, nice article but I see one major flaw: what happens when FREE download sites start getting great user experience as well? A lot of people use iTunes because Apple made it extremely easy to buy songs, in comparison to Pirate Bay that a) Looks Ugly and b) has that awful user experience of torrent files and downloading and all that crap.

So what happens when Pirate Bay (TBP may be wrong example due to recent drama, but you get the idea) actually pays some designer to create flawless user experience, even if it takes talking to Torrent download software producers. Imagine torrent site that is super cute, easy to register, easy to find files, and smooth software to download? That would destroy any other pay site.

Stan_Schroeder · 4 months ago

In some cases, this is exactly what will happen. News (at least some aspects of news) is a good example. It will become impossible for most news publications to charge for certain types of content because a) the content is available elsewhere (blogs) b) it's easy and cheap to set up a platform for delivering that content (WordPress).

But in your example, that's not how it's going to go down. I've listed several ways in which you can compete with a torrent site, and no torrent site will be able to replicate all of that. And even if it were, there will always be fear of viruses and other malicious software. Let's turn the tables around: if Sony creates a Pirate Bay, which works exactly the same but has even better quality, faster speed, great content, AND Sony gurantees that everything on the site is virus-free, and checked for quality, who would use the Pirate Bay?

Noah Thomas · 4 months ago

This is definitely one of the better articles I have read dealing with the issue of "free." Most of the time, it will just be the same regurgitated dribble about how we have to adapt to advertising models and licensing, etc. etc. So I really enjoyed your take.

However, I disagree with you on one of your main theories:
"free will not last forever. No one has to be afraid of free, because it’s just a transitional phase in the history of the Internet. The current trend, where everything seems to lose value, and the price of all digital content seems to inevitably spiral towards zero, will reverse – at least for some types of content."

I feel that the "free" phenomenon will only grow overtime, especially with the sudden increase of more open-source based web platforms. Also, as Deamon stated, for every user-friendly subscription-based service, there will be 4 more FREE services that are for the most part identical in services/content offered. I just don't ever see a healthy majority of users every migrating specifically to subscription based services just for the purposes of time and practicality. In my opinion, any profit-based solution will never be anything more than temporary.

I think people need to look at the bigger picture of what this recent digital revolution is hinting toward: Ultimately, ALL digital content will be free to everyone and instead of trying to figure out how to compensate in the outdated profit system, we need to consider the fact that the system is just that: OUT DATED.

Eventually, technology will advance to the point where people are able to materialize physical objects in their own homes and become increasingly self-sustaining (i.e., what is happening now with digital content will inevitably happen with tangible-physical content) This will of course lead to the ever-increasing loss of jobs, which will then effect advertising budgets (as people can't afford to purchase products or are actually producing them in-house). How will the advertising model survive when advertising itself becomes moot?

Sorry to go off on a tangent, but I just feel like people miss out on the bigger picture. The Internet is one of the greatest inventions of the past century because it is a precursor to the advancement of human society as a whole. It's just a matter of accepting this fact.

MonsterBuzz · 4 months ago

Agree! I'm the one who love free products so much!

Now your articel had gave me second thought..

Daethian · 4 months ago

I've never really given this much thought until I read your article but it's exactly how I shop online. I always search for the best deal but if I have to pay slightly more to buy with one click via Amazon, I do. I even find eBay annoying if it's something I need now and don't want to wait then I'm not going to deal with the bidding and waiting etc.

I've often weighed the price of my time in searching for free software against the price of just buying software. If I can't find something easily in a few minutes, I often just buy it.

Daethian · 4 months ago

I've never really given this much thought until I read your article but it's exactly how I shop online. I always search for the best deal but if I have to pay slightly more to buy with one click via Amazon, I do. I even find eBay annoying if it's something I need now and don't want to wait then I'm not going to deal with the bidding and waiting etc.

I've often weighed the price of my time in searching for free software against the price of just buying software. If I can't find something easily in a few minutes, I often just buy it.

jasonn · 4 months ago

Oddly it works in many ways for many price models. For example, at one time people would have gladly paid $20 a month for unlimited access to all music catalogs. That would have dwarfed any modern music model (but for the government mandate, which seems to be the latest RIAA solution). The issue is primarily cost, because let's face it, nobody is going to pay $12 for an album with one decent song anymore. But, it's also flexibility (as is the focus of this article). It was the liberty of Napster that pushed people to the file sharing network, not so much the cost. I knew people that would buy broadband internet connections just to capitalize on the service. A $20 monthly subscription for the service would have been readily embraced by millions of users.

Then there's GoDaddy. They offer bottom feeder prices and push their customers through painful sales presentations at every turn. It's likely one of the least simple companies to deal with (via their website), but customers tolerate the never-ending sales pitch to save a few bucks.

The problem is value. Most producers don't want to deliver value. The customer wants to pay X for Y, and the producer wants to sell the customer Z. Why? It's often not cheaper. It's not better. It's just what the organization wants to sell.

Apple offered the customer what they wanted: a digital file downloaded instantly for a small amount of money. It's been a wildly successful model. iTunes fits this model perfectly. It gives the buyer what they want in a revenue model the organization can live with, but most importantly doesn't waste the buyer's time. The added value of sync services and a player built into the system helps the cause as well. The question is, will the RIAA ever get it? No.

Daethian · 4 months ago

Well I had a nice comment typed up but when I hit POST I was told to log in with my Twitter account and that of course (?!?) deleted my comment. Then I logged in to bitch about it and got this:

Forbidden

You don't have permission to access /wp-content/cache/supercache/mashable.com/2009/07/16/free-price//index.html on this server.

I would comment more often but I forget to log in to Twitter first and it doesn't remember me and I get tired of retyping my comments.

iTbay · 4 months ago

The Economic Principle of #TANSTAAFL vs the concept of a Free Donut @google

Stan your referring to this economics principle: TANSTAAFL http://en.wikipedia.org/wiki/TANSTAAFL "There IS No Such Thing As A Free Lunch". I even tweeted this yesterday: "There's no such thing as a Free Lunch with the Freemium Model - http://en.wikipedia.org/wik... great model nonetheless @fredwilson "

Essentially, even though the monetary cost of something is it's price, the opportunity cost can be greater than price. For instance, when I am on the phone with Rogers Telecommunications in Canada, similar to AT&T in the US, a $5 error on my billing on their part will take them 1.5 hrs to resolve. Therefore, if I make say $100 per hr, my opportunity cost is $145 dollars. Now times this by millions of Canadians & Americans say in the US for AT&T who dont have the time to resolve these erroneous bills = an exclusive agreement for the iPhone.

I tweeted this the other day as well: "simplicity is the future of everything @google" - simplicity gives u a donut that tastes good at least.

Mervyn Alamgir · 4 months ago

How each company goes about dealing on the free/paid customer experience will be unique to the target customer, industry and perceived value of the product. Apple offers a free music player, iTunes, and offers a free 30 second clip of songs on their stores. Microsoft's recent announcement of free MS Office with an upsell to additional features is recent example. In the end, every company will have to strike a balance between offering some or all of a product for free in order to generate sales, some will fail and some will be successful.

User experience in acquiring a free product does fit in the mix but it will depend a lot on the value of the product being acquired. For example, would most consumers go through 5 sign-up pages and e-mail validation for free MS office vs 1 page for OpenOffice? Probably.

Michele · 4 months ago

Excellent article! Thank you :)

Michael Cone · 4 months ago

I couldn't be more right Its so much easyer to pay if you have the means or save for it . i work hard for to be able to buy what I want and feel good about what I own . most of what is "free" with the hoops will work ok as a trial but the work people put into the creative process . If its priced reasonable is more than fair. My work has a value ...

K. Warman Kern · 4 months ago

How refreshing talking about the possibilities to create value other than price!

Σχολή Χορού · 4 months ago

I am sorry to say that, but nothing is free online. You install a free plugin and you pay with a link from your web site, to the plugin's creator. You read an online free magazine and you increase its rank so they will get well paid from ads. The list is endless. And to end with a live example, you can always get a FREE facebook account. Enjoy.

SamRag · 4 months ago

Really good article, and sums up a lot of what people have been in a round about way saying for some time now. We are almost all willing to pay for what we want, if we like the quality and service. Steam is an excellent example, and I'm surprised that we don't see more services like that out there. I love the idea that I can buy games and not have to worry about the hard copy, or where I installed it - the games are always there, available for me. Therefore the value is much higher, then either buying the hard copy in the store (and loose the key, or the box), or by downloading it illegally - as you will have to do that again for upgrades. So Steam managed to be better than both the original way of purchasing games AND the illegal way!
---
One thing that you didn't mention, but I think has a lot to do with making money online (if we think of this in the relation of Free), is the big step between Free and Paid service.
Let me take two examples: Plaxo.com is free, but you can subscribe to become premium member. The value that it adds is some, but nothing close to be worth the almost 60 USD a year. If the price would be under 15 USD a year - I would have paid that long time ago.
Flickr.com on the other hand has the same set up - free up to a point, but then you have to pay. They offer you more or less unlimited upload of photos and videos along with some extra features if you pay 25 USD a year. So of course they have a lot of people paying for their service.

I've come across a lot of sites recently that have great looking websites and wonderful tools, but then go on to charging even as high as 50 USD a month, for a service that is provided free on countless other websites. ... enough rambling - ... good article Stan!

Twilightred · 4 months ago

Excellent article. Considering it's taken the music industry ten years to begin to catch on to this reality I think we're facing at least another ten with the film industry.

niubi · 4 months ago

I think 'free!' is pretty much a carrot for the donkey, but even a donkey will only chase carrots for too long. DubLi has been moving in an interesting direction using the concept of 'free' or 'almost free' with one of its auction styles (known as "zero") - for just 80 cents, browsers have the chance to get something for free. Given that the site has lots of the latest electronics, that's a pretty big carrot. Aside from that, they also have a 'best price' guarantee. So whilst not quite 'free', it's about as close as you can get.

In the end, it's a tradeoff between the time someone has an the value of the 'free' item. Sites like iPoints require a lot of time to get those points so that you can eventually get your free <whatever> - but given that each point is typically less worth than a cent, is it really worth the time expenditure?

Yair Yona · 4 months ago

the way I see it, the problem is going to get bigger, as 99.9% will give away their music for free in the next year or two,causing inflation of give away stuff, and bloggers and sites wouldn't know who to push first to the front page. By then, we'll have to think of other method to be picked as those whom someone listens to.

bstg · 4 months ago

Stan,

I think your arguments are even more powerful when applied to content used in the context of business. Time can be a more valuable commodity than cash in some businesses. I think there is one other part of the equation when it comes to content for business as well, risk. For a business, paying out of pocket in order to minimize the risk in the activity in which the content was used is often the right choice. I wrote a little more on the subject http://letstalkknowledge.com/the-cost-of-free/

Thanks for the thought provoking post!

Ken

jorgeblanco · 4 months ago

Free has got to be the best marketing technique right now. People cannot refuse a free gift, specially if it's something they want. Then you can offer them related stuff and slowly, but surely, move them from free to paid items and services