Just read a recap of the Free! Summit - looking at how free stuff can be incorporated sensibly into a business model. While the topics were mostly the stuff that is usually talked about on Techdirt (Mike Masnick was the Summit's MC and is head of Techdirt's parent company - Floor64) - business models for journalism, music and movies - one comment in particular caught my interest. Apparently three companies attempting consciously to use free in their business models all found a recurring problem:
"many people who come from a world of scarcity rather than abundance intrinsically distrust free" and need to be convinced that they're not being tricked or receiving a dodgy product.
Think about this for a second. Don't we all wish we didn't have to pay for things? There's always moaning about the price of goods, being charged too much, not having enough money or amassing debt. Yet when we're offered something for free... we're suspicious. We don't trust it. We want to be reassured that it's not a scam. This doesn't happen for everything; there are some things we're used to getting for free: web-based email, for instance.
As Mike mentions, it could be a generational thing: coming from a world of scarcity, it must be difficult to accept that reasonable services or goods could be offered for free without a hidden catch. Chris Anderson doesn't seem to think it's a problem:
"Anything free in the atoms economy must be paid for by something else, which is why so much traditional free feels like bait and switch &emdash; it's you paying, one way or another. But free in the bits economy can be really free, with money often taken out of the equation altogether. People are rightly suspicious of free in the atoms economy, and rightly trusting of free in the bits economy. Intuitively, they understand the difference between the two, and why free works so well online."The issue may well be with attempts to understand and implement business models that intentionally focus on using non-scarce goods to raise the value of scarce goods. Give it away and pray is not a business model - it's a lazy way of trying to create a business. No one has said this won't take effort, that business skills, marketing strategy or consumer relations aren't important. They are just as important, if not more so, than they ever were.
I actually agree with Chris Anderson - it's not hard to understand that free can really work online, where the cost of copying is so close to zero that it effectively is zero. Any digital file can behave just like an idea - it can spread to an unlimited number of people, and does not remove or corrupt the initial holder of the idea. The problems start when the idea (or the file) is confused with the creation or expression. It is a subtle difference, but a very important one. This is where the scarce/non-scarce line is. An idea or digital file is non-excludable and non-rivalrous; creating the file, or expressing the idea requires time, effort, equipment, expertise, knowledge...
If we pay for the scarcities - those things that actually require some effort, need skilled input - and use the "infinite goods" to increase the value of the non-infinite goods, things would be much easier. There would be no need to create scarcity, because that would limit the market, and make it harder to sell the things that can be sold. In the digital era, the task is to find what you've got that's scarce and use the best promotional tool ever: the Internet.