Better than free

I've covered the subject of the gift economy previously in my posting Open Source Your Idea. But thought it needed further coverage. This happens when the economies of scale work on a global level (thanks to the Internet) and the cost of distribution becomes almost zero (but never really really reaches it), it becomes a business advantage to give at least part of your products away (and is still recommended as a strategy by some eminent VC's).
For example, just take a look at how many 'lite', 'freemium' or 'trial' versions of software packages there are out there (I'm currently a sucker for the demo / trial versions of applications on my iPhone).

So, you've recouped the cost of development, shown it costs you virtually nothing to produce a copy (e.g. software, an idea, a process, etc.) and then your strongest competitor comes along with something...... and charges for it. What makes it worse is that customers pay for it, a lot of them.

So how does that work?

Well according to Kevin Kelly, a great modern thinker, Editor-At-Large for Wired magazine and Author of the 1997 book New Rules for the New Economy (which still holds true 11 years on), there are 8 reasons for paying for something rather than settling for a free version:

1. Immediacy
2. Personalisation
3. Interpretation
4. Authenticity
5. Accessibility
6. Embodiment
7. Patronage
8. Findability

Basically, there are several reasons why paid-for stuff is better than free.

It therefore strikes me, in these modern and leaner times, that companies need to reconsider if the really need to give everything away and that this may be the difference between profit & loss (and therefore economic survival).

'Open source' your ideas

So why should you give things away? Well, gifts have been use as promotional or influence methods since animals started giving their food to a potential mate as a way of increasing the likelihood of errrr..... mating. The activity of giving 'stuff' away is used in business to entice customers, but as we all know there really is "no such thing as a free lunch" http://en.wikipedia.org/wiki/Free_lunch

Or is there?
Yes, actually there is a whole group of people out there prepared to give things away to those who are prepared to ask. The 'gift economy' or 'Freeconomics' has been created, mainly as a result of the economies of scale from the use of technologies.

The most obvious example of giving your ideas away is blogging. A lot of people provide their intellectual property for free online in the form of blogs. Here's why I think they do it:

1. To get feedback to improve their knowledge further
Aside from the gratification of being read, bloggers want feedback on what they have written. The blogosphere is full of postings from people who do not claim to know everything, indeed they post to start a conversation or plant an idea hoping to get further refinement or the subject evolved beyond their underdstanding. Basic crowdsourcing!


2. To show what they know

Old joke warning:

There are two rules in business, the first is never to tell everyone everthing...

However, giving a certain amount about what you know away shows clients, employers (exisiting & potential) and the market at large what you understand. Especially if you're a knowledge worker, it shows: your exerience on your subject, your thought processes and your ability to innovate or explain... all very good reasons to pay/employ/listen.

The secret I was recently told by a friend is...

"Telling clients information the second just before it becomes public knowledge
is a learnt skill, knowing when that second is.... requires natural ability!"