The Long Tail is a great concept in our ever expanding, internet connected world. In this book (originally an article), Chris Anderson explained clearly that the market is now almost unending. Exhibit A was Amazon. The vast majority of what they sell (in books) is available at Border’s or Barnes&Noble. But, much can be made from the 20% or so that is not stocked in such physical bookstores. This “Long Tail” is the market available from the rest of the world who find you in other ways, especially the internet. (You can purchase my synopsis, audio + handout, of The Long Tail here).
His long awaited new book comes out in July: Free: The Future of a Radical Price. Here’s the summary from Amazon: “in Free, he makes the compelling case that in many instances businesses can profit more from giving things away than they can by charging for them. Far more than a promotional gimmick, Free is a business strategy that may well be essential to a company’s survival.” You can read the Wired article, Free! Why $0.00 Is the Future of Business that launched his concept here.
The idea is simple enough. Give something away free, give a lot away free, and they will come back for more, and they will willingly pay for the more.
It makes sense. And I know that what we give away can spark interest, generate followership, and maybe produce a long-term relationship with a customer. But even before the book hits, the criticism has started. And the first question is blunt and to the point: if free is such a good idea, and if Chris Anderson is the editor of Wired, why doesn’t he give Wired away free? James Ledbetter provides this criticism in his Slate/The Big Money article: Free to Be Ignored.
Ledbetter is doubtful that the business model works. And he’s got a lot of reason to be so doubtful. We are reading nearly daily that the newspaper as we know it is in great jeopardy. The rumblings have begin that the Kindle, and unknown future such devices, might put “printed books” out of business. And if we think that alarm is too early, let’s remember that we have only had the internet 15 years — and it took just over a dozen years for people to realize that the free content of news was ultimately a threat to the news gathering business. (To put it simply, if news is free, who will pay the reporters to gather the stories and dig into the corners and crevices of our society — in other words, to practice journalism?) On-line music sites have greatly crushed the profits from what used to be called record sales. All of this proves that free works in one way — people like to get stuff free. But free may not bring in enough money on the back end.
(And, by the way, Wired does give much of its content away. I read Free for free on-line).
I write this with few answers— just questions. I really don’t know what will happen. I’m a firm believer in “free.” I have spoken for free, I have sent handouts to people for free, as have many who do what I do. But I can’t give it all away for free.
So where is free going? We all watch and wait.
(By the way, I’m certain that either Karl or I will present a synopsis of Free pretty soon after its publication – and yes, we will pay actual money for a hard copy of the book Free. Probably from Amazon.com).
In this series, Bob Morris poses a key question and then responds to it with material from one or more of the business books he has reviewed for Amazon and Borders.
In their book, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose, when discussing The Age of Transcendence through which the contemporary business world is now proceeding, Rajendra S. Sisodia, David B. Wolfe , and Jagdish N. Sheth suggest that it is “a cultural movement in which physical (materialistic) influences that dominated culture in the twentieth-century are ebbing while metaphysical (experiential) influences become stronger. This is helping to drive a shift in the foundations of culture from an objective base to a subjective base: People are increasingly relying on their own counsel to decide what the truth is…That shift acknowledges a long-suppressed idea in a world largely guided by Newtonian certainty that chemistry Nobel laureate Ilya Prigogine says is scattering to the winds: “Ultimately, everything is personal.”
Thus do the authors establish a frame-of-reference for the thesis of their book: That each stakeholder in an organization tends to thrive best when all stakeholders thrive. That is, no stakeholder group is more important than any other. “It is disciplined dedication to the well-being of all stakeholders that separates firms of endearment from their competition.” Stakeholder relationship management (SRM), the authors suggest, can achieve and then sustain superior business performance that, in turn, will create n a decisive competitive advantage. They are convinced that SRM business models will increasingly be seen “as the most efficacious way to achieve sustained superior business performance in years to come” but only if (huge “if”) the interests of all stakeholder groups are brought into strategic alignment.
These are the dominant characteristics and primary benefits of “firms of endearments”: (1) They align the interests of all stakeholder groups, (2) their executive salaries are relatively modest, (3) they operate an open-door-policy that allows access to senior management, (4) their employee benefits and compensation are somewhat higher in their category and their training is more comprehensive, (5) their attrition of valued employees is much lower, (6) they hire only those people who are passionate (obsessed?) about service to customers and collaboration with colleagues (including associates and suppliers), (7) their people consider their corporate culture its most valuable asset and primary source of competitive advantage, (8) and the marketing costs for terms of endearment are must lower than their competitors while customer satisfaction and retention are much higher.
Who wouldn’t want to be involved with a “firm of endearment”?
Comments, questions, requests, or suggestions? Please share them. They will be most welcome and I thank you for them. Best regards, Bob