Zero, Zilch, Nada
Monday, February 25th, 2008“Free! Why $0.00 Is the Future of Business”
The most common of the economies built around free is the three-party system. Here a third party pays to participate in a market created by a free exchange between the first two parties. Sound complicated? You’re probably experiencing it right now. It’s the basis of virtually all media.
In the traditional media model, a publisher provides a product free (or nearly free) to consumers, and advertisers pay to ride along. Radio is “free to air,” and so is much of television. Likewise, newspaper and magazine publishers don’t charge readers anything close to the actual cost of creating, printing, and distributing their products. They’re not selling papers and magazines to readers, they’re selling readers to advertisers. It’s a three-way market.
In a sense, what the Web represents is the extension of the media business model to industries of all sorts. This is not simply the notion that advertising will pay for everything. There are dozens of ways that media companies make money around free content, from selling information about consumers to brand licensing, “value-added” subscriptions, and direct ecommerce (see wired.com/extras for a complete list). Now an entire ecosystem of Web companies is growing up around the same set of models.
Great feature piece in Wired’s latest issue by Chris Anderson on why everything is becoming free. What Anderson says here about the media business model being applied to more and more industries ties in a lot with what Tom Foremski has been saying about Silicon Valley becoming Media Valley.
And walking the walk, Wired is giving away the print version of the issue (to the first 10,000). US addresses only, or otherwise I would have signed up. Though I got a year’s subscription to Wired free once with my $20 subscription to Salon, so I’ve already benefited. =)