Free: The Future of a Radical Price

Entrepreneurship

Chris Anderson¬†got the world’s attention by writing the best seller The Long Tail: Why the Future of Business Is Selling Less of More, where he describes the economic logic behind some eCommerce sites that sells a immense variety of goods instead focusing in just a few.
In his next book, Free: The Future of a Radical Price, he discuss about the free (as beer): why people are so moved for free stuff, how offering something for free might be a great deal. He gives you an brief and interesting history of the free merchandise, gives several theories (which is the main focus of the book) and several examples that actually happened in real life.
It has some common aspects with the first book: economies of scale and marginal cost/revenue. He shows that if an item cost is too small, you might consider it as zero. Imagine HD space: since the price is constantly dropping, a company might consider is irrelevant and gives for their clients a unlimited space for free. It is not free for the company, but the actual cost is so low that it will not affect your profits in a relevant matter, but will generate a enormous impression for the clients.
Not Too Small to Matter, but Too Small to Meter
The author is prudent enough to not advocate free as a messiah. He in fact believes in the idea of Freemium, in which the product is offered as free for most users and a small fraction will pay for a premium offer.
Anderson eats his own dogfood by releasing the book for free as pdf while the physical is paid. The audiobook can also be found in a free version and is very curious: the full version, which is the complete book, is free while the compact version is paid. Time is money and the compact version saves you time but not the money.