More on ‘free’ as a business model

Last week Chris Anderson of Wired and Long Tail fame posted a preview of his new book on free as a business model and I wrote a post summing up his argument (which I largely agree with) and calling for innovation in business models – we will all still need to find ways to make money after all.

Reading through the comments on the preview and on my post, there is a lot of scepticism about whether things can really go this way.  I think they are already and will go further – maybe not 100% all the way – but enough that understanding this topic is important, and that there will be money made by the entrepreneurs who get there first.

Today Jay Deragon has an interesting post on this topic, largely quoting Kevin Kelly, also of Wired.

He offers some different ways of looking into this difficult topic.

Whilst Anderson explains free by the declining cost of processing, bandwidth and storage Kelly says the same thing a different way – by pointing out that distributing copies of anything is now free, whereas in the previous era copying became cheap, but money was made by selling the copies (books, CDs, etc.).

Therefore, Kelly argues, we need to look for things that can’t be copied if we are going to find innovative business models.  Kelly has one big idea – trust/reputation, and eight others:

1. Immediacy – getting it before everyone else
2. Personalisation – requires an ongoing conversation between customer and supplier
3. Interpretation – make it work for me – Red Hat does this for Linux
4. Authenticity – guaranteed
5. Accessibility – whenever, wherever I want it etc. – this is where BT are heading
6. Embodiment – we still need real things every now and again
7. Patronage – the idea people want to reward their favourite artists – e.g. Radiohead let their fans decide the price of it’s last album
8. Findability – helping people find stuff they want/need – Facebook does this for it’s application developers

These are all great ideas.  Scaling bsuinesses based on them will not be as straightforward as scaling a traditional web business, but if it were easy, everyone would be doing it.

I look forward to hearing how it will be done.