At today’s Library Foundation of Los Angeles ALOUD Business Forum, Kai Ryssdal, Marketplace on public radio commentator and WIRED Editor-in-Chief Chris Anderson, author of FREE: The Future of Radical Price discussed the book and how the Internet is changing business models. My notes:
While the young expect everything on the Internet to be free, older business people believe giving things away is the road to market ruin.
In “winner take all” markets, like Google or Facebook, offering most services free can still generate substantial profits.
The main problem with the Internet isn’t FREE (a zero price tag) – it is infinite competition!
Businesses can succeed in the digital world using the “drug dealer model”: offer the first product free, then compete on service and delivery.
Price is still a difficult concept, and FREE products can’t demonstrate a user’s commitment.
Youtube.com is a phenomenon, but as audiences move marketing will find a way to reach them.
A contrast in choices for young teenage viewers: the 1970s – Gilligan’s Island (period) vs. 2009 – youtube.com. Content is now reaching a mass audience and a niche audience at the same time!
The problem with newspapers: news and paper. Reporters are important, but how MANY reporters do you need at the Michael Jackson memorial? Local coverage (via blogs, community websites, and local papers) and national/international coverage will continue to thrive while regional news media (Anderson’s example: the San Francisco Chronicle) will contract.
The Internet provides FREE shelf space the size of an industrial economy! “The internet destroyed scarecity.”
One of my favorite thoughts: Consumer is the wrong word! People who use the Internet, Facebook, Google, etc. are not at the mall buying jeans – they can’t be characterized as “consumers”!
Links: Chris Anderson’s February 2008 WIRED article FREE: Why $0.00 is the Future of Business
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