The Upside: The power of free

Just because I haven't read a book doesn't stop me from debating it at cocktail parties. I mean, why let something like a lack of information get in the way of forming a strongly held opinion?

So what's currently on my mind is "Free: The Future of a Radical Price" by Chris Anderson, editor of Wired magazine and author of "The Long Tail," another book I didn't read but often debate.
According to the numerous reviews I've read (OK, two), Anderson contends that the explosion of free content on the Web has created an expectation of getting information gratis. Even though it goes against my self-interest as a writer, I can't help but feel the same way. After all, why pay for entertainment when you can watch people falling down at weddings for free?

In his New Yorker review, Malcolm Gladwell refutes Anderson's thesis by pointing out the several million people willing to pay for premium cable television, as well as the million online subscribers to the Wall Street Journal.

But he also describes a very telling study from MIT in which 75% of participants chose Lindt truffles for 15 cents over Hershey's Kisses for a penny, but then reversed themselves when the Kisses were given away for free. "That magic word 'free' has the power to create a consumer stampede," says Gladwell.

Stampede is right. Have you ever been to a free movie screening? Hundreds of people who don't value their own time show up, choosing to spend a couple of hours waiting on line just to save $9. A friend who does radio-station promos told me there are regulars who turn up all over the city just to get prize giveaways. He calls them "prize pigs."

The power of free is also confirmed by a report, written by a 15-year-old intern at Morgan Stanley's London office, that states that teens don't Twitter because it uses up texting credits -- and that they still download music illegally, despite iTunes' making most songs available for just 99 cents.

So if the future economy is based on what Anderson calls the "power of free," how is anyone supposed to make money on content?

I'm not sure that the issue of profitability is as complicated and uncertain as everyone makes it out to be.

For starters, there is the potential revenue stream of targeted online advertising. You realize, of course, that the ads on your Facebook page are not the same as on mine. Some mastermind has figured out that I love show tunes.

The teens in the Morgan Stanley study said they found pop-ups and banner ads "extremely annoying and pointless." But so what? Just because advertising is irritating doesn't mean it's ineffective. Much in the way the prize pigs will put up with the inconvenience of waiting in line for a free movie and a chance to win a Frisbee with a radio station logo on it, 37 million of us have put up with intrusive advertising to get free access to a baby panda sneezing.

But I recently paid more to get extra leg room on a JetBlue flight. Like me, there's certainly an elite group who will pay for the convenience of advertising-free content. In other words, the model hasn't changed: you either suffer some inconvenience for free, or you're rewarded for paying.

What's more, some entrepreneurs even use freebies to generate business in the recession. Steve and Anne Young, owners of Plaza Cleaners in Portland, Oregon, provide free drycleaning for anyone needing an outfit for a job interview. Their goodwill has attracted the attention of drycleaners nationwide, who have literally followed suit. And other customers have lent their support, donating money and traveling across Portland to give Plaza Cleaners business.

"We're going to continue whether it eats into our profits or not," says Plaza's manager, Kathey Butters. Now that's the power of free.

And that, my friends, is The Upside.
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