Freeconomics, Of Couse!
Chris Anderson, author of The Long Tail, has an interesting post about some emerging trends in our behavior, largely surrounding our newfound love and dependency on technology and all things gadgetry:
I begin my economics of abundance speech with Carver Mead's mind-bending question: "What happens when things get (nearly) free?" His answer is that you waste them, be they transistors or megabytes of bandwidth capacity. You use them profligately, extravagantly, irresponsibly. You shift out of conservation mode and get into exploitation mode.This reminds of me of the trailer at the movie theater where there's the annoying cell phone guy that is on the phone in all the inappropriate places and cackles at the end, "Don't worry, I've got like a million minutes." I certainly do see that this newfound obsession with abundance does impact the way we live our lives.
Chris’ main distinction, which I think deserves a secondary nod, is that the price has to approach free or virtually free. I think there’s an interesting phenomena that does happen at the end of that spectrum, or perhaps it’s more of an inflection point, that the value of an object becomes abstracted. The most common case where we make this evaluation is with the “free give-away”. Many the entrepreneur has fought with pricing for their product or service - constantly balancing the value proposition of free versus that of paid. Recently, we’ve seen many fall into the Freemium model for pricing. Why? It’s easy to choose. By segmenting our feature set into convenient columns, we force the customer to evaluate the value - using the language and imagery we choose. Of course, it’s our challenge to find the right mix to create the proper slope - but it’s easier than retracting a free offer, isn’t it?
In many of our minds, free translates to disposable: Buy this shredder, get a free toaster. We are forced to reconcile either our need for the second, the quality of the second, or both. Of course, the second one is trivial in nature.
In other minds, it’s an extension of the original offer, not free at all: Buy this PDA and we’ll give you a free SD card. Can I really use the PDA without the card? No - it was already part of my purchasing research. We’re more likely to wonder why it wasn’t included originally, not value the token.
Lastly, there’s the notion that free implies some form of bait: Try our product for free or return it in 30 days for free! Everyone’s been burned on this one, right? The process for the return is so difficult or tedious that you actually end up eating the loss. It’s established a general distrust in our collective minds that “some things are too good to be true”. We’d rather pay and know the extent of our liability than relinquish it to that unseen abyss.
But the science of free, it’s still evolving. As Chris points out:
With apologies to Levitt and Dubner, I'll cheekily call the emerging realization that abundance is driving our world "freeconomics". Understanding when to shift out of scarcity mode and start giving away what you once held dear is a core competency for our age.They same common sense is not all that common; perhaps the same can be said for abundance.
technorati tags:freeconomics, chris+anderson, longtail, abundance