Free: The Future of a Radical Price
by Chris Anderson, editor of Wired magazine, author of The Long Tail
Chris Anderson's argument in this book is that "information wants to be free". Free, as in: available at no cost. As the cost of computing power drops every year, it becomes more and more practical to give media and software products away for free. This blog is a perfect example - Google hosts my blog and gives me the tools to create it for free. And if some people give their products away for free, then other people will find it difficult to charge for similar products. How many online newspapers do you know that you have to pay for?
So how can you make money by giving things away for free (or selling them below cost)? Well, there are basically three ways to do so, either the free product is payed for by someone else (for example, advertisers), or it is a loss leader designed to entice people into spending more money (for example, products with free and premium versions), or it is designed to grow market share and the company will figure out later how to turn that into money (or not, as the case may be).
There are also people who are happy to give things away for free and not make any money, maybe out of the sheer goodness of their heart, or because they want fame or status, or because they just enjoy creating things. Wikipedia, for example, makes no money.
I found Free to be unputdownable. It's quite short, but full of interesting information, ideas and speculation. And Chris Anderson is an extremely clear writer; although he has an easygoing, conversational style, he doesn't pad his book out with hyperbole or pointless anecdotes like some writers. Reading it gave me a new perspective on the world, and made me a bit more optimistic about the future.
Note: There is a free pdf of Free on Scribd, but unfortunately it is only available to people in the United States. I got my copy from a library.