Free: 8 key ideas
The core ideas of Free, each in under a minute, written in our own words. Want the full depth? Get the book.
- IDEA 1 OF 8
Free can be a business model
Anderson argues that digital technology has made the cost of producing and distributing many products close to zero.
This makes giving things away for free a powerful business strategy. Giving products away can therefore bring in money in other ways.
- IDEA 2 OF 8
Zero is special
Anderson explains the zero price effect: people treat free very differently from cheap.
Free attracts much more interest. Even a tiny price makes people stop and think, but free removes that doubt, so many more people try it.
- IDEA 3 OF 8
Freemium mixes free and paid
Anderson describes freemium, where a basic service is free and premium features cost money.
A small share of paying users supports the rest. Many apps and online services use this plan to bring in a large number of users.
- IDEA 4 OF 8
Cross-subsidies pay for free
Anderson explains cross-subsidies, giving one product away to sell another, such as cheap printers and expensive ink.
Free leads to sales. The company earns its money on the second product, so the free or cheap first one acts like an invitation.
- IDEA 5 OF 8
Advertising supports free
Anderson describes three-party markets, where a third party, such as advertisers, pays for free products.
Media often works this way. The people using the product pay nothing, while the advertiser pays to reach them.
- IDEA 6 OF 8
Gift economies exist
Anderson describes non-monetary motivations, such as reputation and attention.
People share for many reasons. Many people write, make or share things for free because they want respect from others or enjoy the work.
- IDEA 7 OF 8
Abundance changes value
Anderson argues that when something becomes abundant, value shifts to what is still scarce.
Businesses must adapt. A business that keeps charging for what has become cheap may lose out to rivals who find the next scarce thing.
- IDEA 8 OF 8
Free is not the end
Anderson argues that companies can still make money in a world of free.
They must be creative. Free does not mean that nobody earns anything, but that the money comes from somewhere else, such as extras or ads. Smart companies find that place.
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