The economics of free

I’m a fan of BBC world service’s Digital Planet and one piece they had a few weeks ago was concerning the book ‘Free’ by Chris Anderson. Anderson has, I understand, a history as an editor of Wired. Although I’m currently going through the book, I’ve found the book interesting from a variety of perspectives:

1. Historical: The origins of ‘free’ have linguistic roots; distinguish between libre (free as in speech) and gratis (free as in beer). This is a distinction often made in the open source community.

2. Economics: Anderson introduces a distinction between the ‘atomic’ economy and the ‘bits’ economy. Both have notions of free, but with the latter, there are really interesting observations. With the former, we have ‘free’ in notions which are although already familiar to us; have very interesting dynamics. Consider the following atomic products of free:

i. Buy one get one free promotions
ii. Free newspapers
iii. Free radio
iv. Free samples.
v. Free products that require continuous purchasing, for instance, a free laptop that comes with a mobile phone subscription.

There are varied notions of ‘free’, this affords a very complex and nuanced notion of the economics of free. For instance, the success of the pamphlet ‘The Onion’ in the early 20thC is based on its free distribution, yet for other products, ‘free’ spells ruin.

3. Psychology: Behavioural economics apparently has a lot of insights into our rationality concerning ‘free’. Behavioural economics is a broad term for a whole gamut of subjects examining our economic behaviour, such as evolutionary biology, psychology and game theory. Apparently, we are more drawn to ‘free’ things even if we do not want or need it, and we are drawn to free in a sense of self-preservation. Anderson gives an example: if we were looking for socks with padded heels and toes, but saw a free pair of normal socks, we are disposed to obtain the latter because we percieve free as ‘no loss’ compared to the loss of capital.  The role of psychology in advertising is also an interesting and expected issue to raise.

4. The present zeitgeist. I consider myself particularly savvy in that I ‘get’ all of his references to things like google calendar, google reader, hulu, yahoo answers, wikipedia and so forth. This is a book for the noughties (or ‘google’) generation. As stated in the initial chapters, there are all sorts of divides between our attitudes towards free: for instance, concerning open source technology; software and music piracy; free promotions and advert-supported media. But, Anderson claims, the real distinction to be made regarding this is a distinction between two camps: those below thirty and those over thirty.

5. Current issues. I’ve not finished the book, but there are certainly issues concerning free to be made regarding the following issues:

i. Gaming and pricing
ii. Open source software
iii. Digital rights management and mp3 piracy
iv. The numerous discourses concerning ‘free’ throughout the past three centuries (such as ‘keep music live’ in Britain).
v. How game and software developers, publishers and online retailers manage the notion of free.
vi. The public domain (websites like Librivox, or the Gutenburg Project)
vii. Open access journals and other academic literature: how should academics view open access? will open access benefit education from primary to university level?

I’ll just leave the post by stating that in the BBC interview, Anderson stated that there will be a book released of Free, as well as two audiobooks that will be available: one which you pay for and one which is FREE! Also, one of these will be unabridged, and the other, abridged. Take a guess which is which?

You may be surprised. In a sense, Anderson is trying to ‘prove’ a point made in the book by the marketing of it…

Michael

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