The Downside of Free
Everyone is talking about Chris Anderson’s new article about Free stuff - very interesting article.
To me there are two kinds of free:
1. The company invents a way of delivering a product or service at nearly zero marginal cost. Google and Flickr are examples of this strategy - these are the good guys.
2. The company invents a way to bill the customer in a sneaky way for extra little crap, allowing them to offer the main product for free. Anderson’s example of Gillette and razors is an example of this strategy - as are bank overdraft fees, change fees on airplane tickets, the “Free Credit Report” ads that you see on late night TV, the extra minutes that are billed at a much higher rate than the minutes included in your cellphone plan, Blockbuster’s inflated late fees (before they got sued). The list of examples in this section is longer because established businesses with lots of market power are more comfortable extracting value than creating value. These are the evil guys.
