Free Pays Off

The theme of this week's readings is free. Free content and media through the internet. Chris Anderson chronicles this shift to free stuff by starting at a beginning of sorts, with the onset of advertising on the radio and in television. Advertising agencies pay to have their content displayed, which in turn pays for media to be free for everyone. This also happens in print newspapers and magazines. Anderson follows this method of advertising as it branches over onto the internet and discovers that it is quite different than the way it functions in traditional media. "Advertising in traditional media...is all about selling a scarce resource" of space. Yet, on the internet, there is an infinite amount of space, so selling it done differently, either by "cost per click" or "cost per transaction," just to name a few.

Anderson eventually branches off from advertising to just talking about the inevitability of everything becoming free. He claims that this new free model of business would "have only been possible with ubiquitous broadband Internet access." In a generation of fast and easy access, where virtually anything can happen with a click of a button, today's generation of youngsters are programmed to understanding the ways of getting things for free via the internet. In lieu of this, business have changed their practices and have started giving away stuff for free. Anderson categorizes five way in which they do this:

1. Selling virtual items: Anderson explains this in terms of online games. Essentially, business make it so that you can play their games for free, just by downloading the software. Where they make their money however, is through virtual items, which enhances the online gaming experience, taking the game a step up from the basic free download. These virtual items are paid for by the user only if they wish to get all the extra stuff to make their experience much better. By doing this, there is a higher incentive that dedicated users of the game will pay to get all the extra stuff. The user understand what they are paying for and therefore the risk of disappointment is lover and the odds of their returning to buy more is much higher. (Example given is of the game MapleStory).

2. Subscriptions work similarly to selling virtual items. Except there is a monthly rate that is paid to get a lot more than one virtual item. So instead of paying for one or two items at a time, you pay a monthly subscription rate to get access to all items. (Disney's Club Penguin and Pirates Online both do this).

3. Advertising: This is essentially product placement ads in virtual games. Advertisers pay to have their ads displayed throughout the game and in turn, the revenue that the game's maker gets pays for users to play the game for free. (Side note, I thought a great use of this was in Facebook's The Sims Social, where on Halloween they did this whole "Twilight" thing >.<!)

4. Real Estate: Anderson uses the example of the virtual game Second Life (which I had never heard off until three days ago in my New Media class where we watched a very creepy documentary about it.) It's essentially like The Sims, except people refer to it as their "second life," because it depicts real life so accurately (*shudders*). In any case, in Second Life, there is land to be bought, where the real estate agency is Linden Labs, the creators of Second Life. Essentially, users must pay to purchase  or lease land from Linden Labs, which they are then able to build homes and customize them either for personal use or to resell or lease to other paying users, so that the initial purchasers of the land can also make a profit off of the virtual land that they purchased from Linden Labs, who also makes money from the initial purchase. 

5. Merchandise: This is just selling products, like toys, that have a virtual component to them that can be accessed on the web through special codes that come with the physical product. It is a clever combination of paying for the physical toy and getting the game online for free. (Personally, Lego does this really well).

When it comes to music, free is a word that proceeds "music" is all cases. Yeah, sure 90% of the listening population "steals" music online, but we all know in a growing technological age, traditional forms of music--er, physical forms of music--will begin to go out of style (unless you're like me a enjoy vinyl, but that doesn't count anyway, cause I buy records secondhand so the record labels + artists don't even get profit over it anyway. It's kind of like artwork's suppose to be?). The mp3 player did that much for music as well. (Not that it matters, because we all know record labels = evil). Anyway, as more music is being stolen or whathaveyou, more music is being put out on the internet for free...and legally. The whole concept (posed by Anderson and restated by Caramanica and MacMillan) is, if an artist releases their music for free, thousands of people will listen, stream or download it for free. The more people listening to the music, the more it circulates and the more fans the artist makes. More fans = more tickets and merchandise being sold for and at concerts. The bigger the fan base, the more likely there will be actual physical sales of the music. Oh em gee, what a shocker. Because, honestly, if you really dig an artist, you will go out of your way to buy their music or support them in their concerts (where artists make most of their money anyway). 

Anderson posed the same idea to books, but really, we all know physical books > ebooks any day. (But the whole free garnering actual sales method works for books too).

In a nutshell, Anderson's claim is absolute: "Free makes Paid more profitable."