Negative Reviews of Chris Anderson's Free Way Off Base

Posted by: Aaron Pressman on July 07

Just as various industries are being reshaped and remade by the current economic downturn so too will much conventional wisdom about marketing, competing and even pricing. Into the maelstrom today comes the release of Chris Anderson’s book Free: The Future of a Radical Price. You can read it free online here. Anderson, the editor of Wired magazine in his day job, is interested in the rapidly declining cost to reproduce and distribute digital goods of any kind, be it a news article, a pop tune or an app for your smart phone.

Since the additional, or marginal, cost to reproduce and distribute another copy of an MP3 file or web article is so low — and getting lower every year — companies should consider new business models, the book argues. Such models might include giving away a product but charging for a premium version or service, like The Wall Street Journal does, giving away a product but charging for a related product or service, like cell phone carriers do, or giving away a product and collecting revenue from someone else (usually an advertiser) like Google does. And those are just some basic thoughts — Anderson has 50 different models riffing off the concept of free.

But Anderson’s book has been met with some withering, if largely off- base, reviews in the mainstream media. Click through for a run-down of what Malcolm Gladwell and Janet Maslin missed.

In the New Yorker, Malcolm Gladwell, who's written several books using a similar formula, castigates Anderson as a "technological utopian" who's showing only one side of a trend "too obvious to write a book about." For a free read of the criticism, click here.

Ignoring dozens of successful examples of free-serving businesses, Gladwell fixates on Anderson's discussion of Google's YouTube video service. Noting a discredited Wall Street analysis that YouTube loses half a billion dollars a year, Gladwell concludes that free is destroying the site. It's as if Gladwell skipped pages 195 and 196 where Anderson examines why YouTube is having trouble running ads against its videos unlike a competitor, Hulu, which runs plenty.

And he seems to have ignored the conclusion of the book where Anderson considers the impact the weak economy will have on all kinds of businesses:

Free is not enough. It also has to be matched with Paid. Just as King Gillette's free razors only made business sense paired with expensive blades, so will today's Web entrepreneurs have to invent not just products that people love but also those that they will pay for. Free may be the best price, but it can't be the only one.

Finally, as is becoming all too typical for Gladwell, the actual facts about some of the examples he cites don't fit the story he's spinning. He cites The Wall Street Journal as an example of moving in "the opposite direction" of free, but much of the paper's web site is available free to non-subscribers and users of the paper's new iPhone and Blackberry apps. Premium cable TV services may be "doing fine" but even they are about to start giving away shows online to their existing subscribers to fend off other free video sites. And I'm not sure how Gladwell expects Apple will soon make more money on iPhone app downloads than it does selling iPhones when it gets something $600 from AT&T for each phone sale and most downloads are free programs. Seems like lots of movement towards free to me.

In the New York Times, Janet Maslin has an even less meritorious critique. She spends half her review complaining that Anderson is playing "fast and loose" with the facts because he cites different details of a famous social science experiment than a reference to the same experiment in another book. Had Maslin spent even 2 minutes online, a Google search would have revealed that the experiment in question (PDF file here) had two phases and each author is referring
-- completely accurately -- to a different portion.

Maybe we shouldn't be surprised that reviewers so close to the media business, suffering through its greatest reset in the modern era thanks in part to free web sites like Craig's List, are hostile to Anderson's ideas. So take the reviews with a big grain of salt and read the book for yourself. Anderson's case studies and anecdotes drawn from science and business will be excellent food for thought as you try to reset or start up your business.

(p.s. if you want to read Anderson's own responses to some of these reviews, check out his blog, The Long Tail.)