What is Free Doing to Our Economy?

Chris Anderson, editor of Wired Magazine and author of Long Tail, has stirred a good debate on the future of “Free.”

His to be released book,  Free: The Future of a Radical Price is about to hit the bookstores and Malcolm Gladwell (author of Outliers
and The Tipping Point) is already taking him to task. Gladwell’s challenge to Anderson’s premise is really one that argues the economic problems with a “free” economy, not really that it is not an eventually in the “future of radical pricing.” I don’t really dispute that argument. I also totally agree with the inherent yield of free:

So how does YouTube bring in revenue? Well, it tries to sell advertisements alongside its videos. The problem is that the videos attracted by psychological Free—pirated material, cat videos, and other forms of user-generated content—are not the sort of thing that advertisers want to be associated with. In order to sell advertising, YouTube has had to buy the rights to professionally produced content, such as television shows and movies.

However, I am inclined to support Seth Godin’s argument:

Who cares if it does? It is. It’s happening. The world will change around it, because the world has no choice. I’m sorry if that’s inconvenient, but it’s true.

This begs the question…What do we do about it? If consumer behavior has adopted the expectation how do businesses adjust and avoid the YouTube consequence (i.e., “Credit Suisse estimates that YouTube will lose close to half a billion dollars this year.” Gladwell)?

I think Dave Winer and Jay Rosen is giving some good thought to this issue in his essays on Rebooting The News.

I look forward to seeing if Chris Anderson has any conclusions in Free: The Future of a Radical Price. I suspect as the editor of a print magazine that charges, he is thinking hard about solutions.

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