Nick Webb, Nick, Webb

Chris Anderson at The RSA

June30

Tonight I went to go and see a talk at The RSA in London by Chris Anderson, editor of Wired magazine and author of The Long Tail.

Chris was talking at The RSA to promote his new book titled Free - The Future of a Radical Price.

I went to see Chris because I disagreed with him. I normally go to see speakers I agree with. This time was different. I thought that I would try to keep an open mind in the hope that Chris would successfully disconfirm my existing views. He didn’t.

Perhaps I didn’t ‘get it’ but I didn’t see the point of his new book. To paraphrase what I believe it to be - in the new digital world the ‘marginal cost drops virtually to zero’ so things can truly be offered for free unlike the ‘tricks’ needed in the physical world of the past such as buy one get one free. In short, in the digital world, there is such a thing as a free lunch.  I’m pretty sure Chris is confusing marginal cost and average cost here. There’s a significant and important difference in economics terminology. The difference is that marginal cost is the additional cost in producing one more unit of the good or service. It doesn’t include the up-front fixed cost. What does is the average cost - the total cost divided by the number of sales. Which with an extraodinary amount of sales can go close to 0 per customer… but never free.

So having talked briefly about free, Chris went on to talk mainly about ‘freemium’ - the combination of free goods with an additional something that you pay for. He cited Club Penguin, an enormously successful site for kids, where your child can play for free but there are highly desirable items like having a pet which you have to pay for. As one wit on twitter (witter? wit twit?) pointed out, as Chris primarily focused on freemium, maybe his book should have been entitled ‘Cheap’. Regardless, I don’t see any insights here. No useful predictions of the future, more a retelling of the past and present.

As with The Long Tail, I think Chris suffers from Man-with-a-Hammer syndrome - as Mark Twain said “To the man with a hammer every problem looks pretty much like a nail’. Except in this case there are no new insights. This is unlike the Long Tail where there was the restatement of an old idea (power law). This is the disappointing second album when the first album wasn’t all that much cop. Each of his examples missed out on talking about important contributing factors. One notable one being the reciprocal nature of giving away free things e.g. The RSA certainly hopes that offering these free talks will encourage attendees to become Fellows.

What was fascinating to me was that, despite many fallacies in his argument, Chris managed to speak articulately for 45 minutes delivering each of his points with excellent and interesting stories. This is a skill which I admire in Chris and would love to be better at. There’s two lessons I take from this. One, be cautious learning from interesting stories. And two, it’s no good being right, you must also be convincing. Telling stories is perhaps the most palatable way of doing so.

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