In this months WIRED magazine Chris Anderson answers the question ‘why $0.00 is the future of business’. His new book is going to be ‘FREE’ and will be published in 2009. This article is the introduction of the book.
In the article Chris talks about the way business is going to give away their products to customers. He outlines a big difference between free and cheap. When a product is cheap the buyer still has to make a decision to buy. When a product is free no decision is made and the buyer just starts using the product. One of the bigger models at the moment in the webbased world is the regular versus the premium product. The regular product is free to everyone and the premium product is available at a cost. Only 1% buys the premium but that is enough to make a profit for the company. The total operating costs of a company are realy low. Today in the online world storage and distribution are virtually free. The time it takes to start a product is almost nothing. You can make a new website or application is one day or two weeks. This is nothing compared to traditional software development cycles of more than 6 months. These companies do not employ hunderds of people. In the same issue of wired there is example, 37signals, who only employ 10 people and serve 1.000.000 customers!
If your company is going to give away some products, every strategy in your company has to be revised. You have to start using cheap production methods and knowledge management tools (eg. Enterprise 2.0 platforms). Make decisions about what products to give away and what products to sell at which price. Where are my people going to work, do I need an office? There are so many questions rising about this theme. I think it is going to set the trend for business the next years. At least in the webbased business, media and entertainment and other types of business who profit from free distribution and storage!
I already got a copy of ‘The Future of Management’ by Gary Hamel. I think this book and FREE are going to be complementary! The combination is going to set the standards for marketing and management in the future.
When I finished Gary Hamel’s book, I will talk about the combination some more. Do you agree? What do you think about the FREE article? I would like to read your comments.