We owe a lot to Chris Anderson. Not only did his Long Tail give us a way to conceptualise the business models around aggregated, niche, online markets, he continues to challenge the way that we think about business in an always-connected world. Here he tells us why free is the future of business.
David Armano has taken the visual approach (of course), mapping out the four types of free that Chris is talking about:
- Free 1: Get one item free, buy another (as popularised by King Gillette — yes, of the razors — give away the handle but charge for the razor blades)
- Free 2: Free item paid for by your attention (ie advertising)
- Free 3: The so-called "freemium" — where the free "version" of a product or experience is cut down in features, prompting the purchase of the "feature rich" product or experience (ie shareware software)
- Free 4: The "Gift Economy" — where something is given away in exchange for a non-monetary (or indirect) reward.
It is this final "free" that Christina (CK) Kerley has been talking about (as the share economy). It is the fundamental transformative move AWAY from price as a measurement to VALUE as an indicator or worth. Of course, this places the individual at the centre of the method of evaluation and ranking … for the value of a product or experience will depend on a combination of its RELEVANCE to a consumer and their NEED state. This alone will require us to re-think our approach to the business-to-consumer relationship. Moreover, it will transform how we imagine a business-to-business environment.
But the question for marketers of all shapes and sizes is not, "What will FREE cost us"? — but "What value can I exchange?".
Video via Amanda Mooney @ American Shelf Life.