Tuesday, July 14, 2009

Free is expensive.

So I'm about five minutes into the audio version of Free: The Future of a Radical Price when I realize that Chris Anderson is full of shit.

Okay, I'm being a little harsh, but his opening examples are pretty weak:

I don't know what dictionary he uses, but his understanding of what is free isn't even close to mine. His first example of free is that the Monty Python troupe loaded YouTube with freely watchable, high-quality videos of their most popular sketches, and in return only asked that people show their appreciation by purchasing Monty Python merchandise. Hey Chris, I don't know if you noticed, but those are not free videos, those are commercials.

Just because the chick with the huge jugs makes me think about buying a sexy bra for my girlfriend, I don't count the Victoria's Secret commercial as some free gift. Are you saying I should?

It's advertising. Every year, for the Super Bowl, companies around the world attempt to produce the most outrageous, the funniest, the most interesting television commercials. For days or even weeks, those commercials are the topic of conversation at home, at work, and in the mass media. These are commercials, free entertainment that's been around for decades. But who doesn't understand that this advertising method increases the cost of production?
And movie trailers are often much more entertaining than the feature film, and totally free, but still, created with the intent of getting me excited about dropping $7.50 on Hollywood's latest crap.

What about Chris' second example, that he's using a $250 netbook with a free Linux OS and free Internet browser and free wireless Internet access? Well, he admits that he's enjoying a $3 beverage in a coffee shop, so maybe the cost of all the free Internet is hidden in that deliciously overpriced cup of coffee. And Linux may seem free, but many people donated their time to make it work.

I understand where he wants me to follow, I mean, I downloaded the audiobook version of Free for free an burned it to a CD that I'm playing in my car. (Not right now: I can't type, listen and drive all at the same time. I had to pause the book while I continue to type and drive.) And now I'm talking about the book and spreading the word for free. All of you millions of visitors will now rush out and drop twenty-seven bucks on Anderson's book based on my say-so.

The hardcover edition of Free retails for $26.99 for 288 pages. Minus blank pages and the appendices, you might have 269 actual reading pages, which comes to ten cents a page. By comparison, Harry Potter and the Deathly Hallows packs in 784 pages for $34.99, which compared to the per page cost of Free, gets you basically 435 additional free pages. Why the price difference? Why does one publisher need to charge more for their product? Or, why is the other seemingly charging less? Does Arthur A. Levine Books feel like they gave away 400 pages of Harry? Did Hyperion add my download into the total cost of Anderson's book?

Free is built into the cost of everything.

I've seen articles that blame the high cost of paper on book prices. But if that's the case, then how do you explain Kindle e-book pricing of $9.99 per title? Author advances and royalties, editing and marketing costs should be the same fixed price for an e-book or a print book. Are you saying that the 288 pages of paper costs $15? Or does that fifteen bucks cover the cost of free? If so, then how much of that $9.99 Kindle price is padded to cover free?

The cost of free is leveraged across the breadth of products offered by all companies. Books, sneakers, and breakfast cereals are all price-adjusted to accommodate free: when we buy anything, we all pay for free. Free is part of the cost of doing business.

When you start a business, don't forget to calculate the real cost of what you will give away for free. At the mall, the Chinese food place in the food court that charges $6.99 for lunch gives away free samples; I know because I eat them. McDonald's, with it's "dollar menu" does not. The guy who paid $6.99 for beef with broccoli subsidized my free sample.

Does this explain the mess the financial world is in today? A few years ago, there was so much free money flowing into mortgage loans and speculative investments. But now all that free has come back to bite us in the ass. Tell me now how free doesn't cost me anything.

What gets me is that so much more used to be free. TV was totally free before cable and video rentals. Radio was totally free before satellite. Umm, okay, that's pretty much it.

Someone tell Anderson that the only things now that are truly free are kitties.

(yes, I know that "free kittens" are never free... I thought the joke was self-explanatory. see, I'm a-winking ;-) )