CEO Blog - Time Leadership

Free - The Future of Radical Price and The Experience Economy

I am just back from a day at Fire Island - a beach community that does not allow cars. Amazingly busy place for a Friday. I thought people worked on Friday. I also thought there was a tight economy but that too seems forgotten there.

I read one book and listened to one. They both play to each other so I thought I would review them together. One is Chris Anderson's "Free - The Future of Radical Price" which you can download for free. Anderson is the editor of Wired Magazine and author of The Long Tail, one of my favorite books.

Malcolm Gladwell (another of my favorite authors) did a great review of Free in New Yorker.

The thesis is Free is a business model that is here to stay - particularly in information and software. I know I use a lot of free tools is social networking like Statcounter, Blogger, Ping.fm, Hootsuite, Twitter, Linkedin and facebook. I pay nothing for them. And I also contribute a lot to free - my blog is free (although there is some small advertising revenue and I suppose it sells Time management books)

So how do companies make money when things are free?

1 - They sell advertising so the user gets it for free but the advertisers pay.

2 - They are Fremium meaning they have a premium product that people can upgrade to if they choose. it has been shown if people like something they often want a premium brand of the same thing.

He encourages people to think abundance - not scarcity. My brother, Lyle, ascribes to this theory in a big way.

He sizes the "Free" economy as about the size of a small country like Canada.

The second book is "The Experience Economy - Work Is Theatre and Every Business is a Stage" by Joseph Pine II and James Gilmore. The gist of the message - make your product an experience. Do not sell on price. There are tons of examples where identical products are sold at different prices because of the experience associated with one - EG restaurants. Escape price - sell experience.

An experience engages customers in a memorable way. And experiences need to constantly change. Once we experience delight and memorable, we expect that to be the minimum so we need to up our game.

Experience comes in 4 ways:


1 - Entertainment - amuse people - they pay for that.
2 - Education
3 - Escapism - treat the imagination.
4 - Aesthetic - for me, great wonders of nature are hard for man made monuments to top - EG - hike the Grand Canyon.

Engage all the senses.

Increasingly I see people willing to pay for experiences - often paying for things that were free. For example - paying to join a running club. And I certainly see the need to not be a commodity and see that "Experience" if well done can make the difference.

Both great books for me at this juncture in my life. I am trying to figure out the future of business as that is the way to thrive.

posted by Jim Estill @ 11:13 PM