Soundview Executive Book Summaries

Here’s Some Free Advice

I’ll openly admit that I struggled over the title of this post. The expression “Here’s some free advice” is one of my least favorite in our vernacular, but it seems fitting in light of the topic: zero price as a business strategy.

Soundview’s first edition of 2010 featured a summary of Chris Anderson’s book Free: The Future of a Radical Price. I’ve mentioned this title once or twice because it was one of the most unique books written in 2009. One concept to which I’ve returned several times after finishing the book is the Anderson’s contention that free is now just another pricing version.

He discusses the use of “versioning” in pricing to describe the way individuals will pay different prices for the same product. One reason I keep thinking about this idea is that I find myself constantly looking around for examples. I took advantage of the extra showings that movie theaters were running during the holidays and went to a movie before noon, a rarity in my neighborhood. Anderson uses the movies as an example of an instance of versioning. I went to an 11:00 a.m. show because I wanted a matinee price (and because I knew I wouldn’t inadvertently doze off as I occasionally do at late evening shows). However, my lower-cost ticket gained me admission to the exact same film viewed from the exact same seat for which people would pay $11 per ticket in a few hours.

I understand that I was really paying for the time of day, rather than the ticket, but it reinforces Anderson’s point that free has become just another price point: full price, half price, no price. We’re not at the point where theaters are offering free showings, but instances of a free preview if you buy a ticket for a current release occur from time to time. As theaters continue to compete with better home viewing experiences, one wonders where the future of free in the world of the box office is headed.

And now for my free advice. If you would like to learn more about the use of free as a pricing strategy, particularly as it applies to online commerce, Chris Anderson will be the next guest on Soundview Live. On Wednesday, January 13, 2010 at Noon Eastern (9:00 a.m. Pacific), the Editor in Chief of WIRED magazine will discuss his book Free, as well as answer listener questions during a live, interactive Web conversation. Best of all, this event is (that’s right) FREE for Soundview subscribers. Click the above link to learn more about Soundview Live and be sure to join us on Wednesday, January 13!


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