Earlier today I attended a WIRED seminar moderated by David Rowan, Editor of Wired UK, with Chris Anderson (Editor in Chief of Wired and author of The Long Tail). The seminar’s title was pretty promising. Anderson covers an astonishing array of new technologies and idea in each issue of Wired. But which out of them does he feel merits the title of the Next Big Disruptive Idea?
Disruption 1: Free
With Anderson’s book, Free, hitting shelves in July, it was hardly surprising that he would mention the idea behind Free and Freeconomics. “Google was built on free”, he commented. Revenue comes from its ability to sell advertising through Adsense and Adwords. Google continues to expand its product portfolio and give it away for free (Google Docs, Mail, Maps, News, Images, Calendar and so forth) so that it can extend the reach of its network in order to bring consumers and companies closer to its key offering (search) and income source. For this reason, it can afford to compete with media companies, Microsoft and anyone else it chooses to.
Arguably Google does not even sell advertising because it is a direct ROI model. You pay for hits. Let’s call it advertising anyway. Or as Anderson calls it, “the holy grail of advertising – selling 3 words to 3,000 people who want them. Not annoying 90% of people 90% of the time”.
Maybe Google is a bit too successful for us to draw comparsions with. What about products we can relate to though? Another brand employing Freeconomics is Flickr. Anderson introduced the idea of Freemium and Versioning. Flickr provides a free service to anyone who wants it. However it also provides a professional paid-for service to the individuals and brands that demand it - a tiny minority. Hence it has 2 versions of the same product. 95% of us take the free service, and 5% of us enjoy the service so much we then upgrade to a superior service. Anderson explains that when consumers buy into a product/brand/service before money changes hands, the price becomes a lot more inelastic when those consumers decide to trade up to the superior version because you already have loyalty and satisfaction.
Product trialling is nothing new, but remarkably, premium products have rarely employed this tactic. I have noticed though that this idea has been taken up by the plethora of independent iPhone app developers. Chances are if there is a paid for app at the App Store, it has a paired down ‘Lite’ cousin lurking in the free section acting as the recruitment workhorse.
Anderson continued to talk about Free in gaming where playing is free but status, reputation and short cuts can all be bought (legally). He was also quick to point out that Free is not a coverall for a brands’ products. “Give away a free version to the majority, but sell the superior version to the minority.” Wired Online is a good example compared to the print edition. As was the introductory analogy from Free, Monty Python’s YouTube channel. The Monty Python brand gave away short form high quality clips, resulting in a resurgence of interest in the product. Subsequently, DVD’s sales soared taking the cult series up to number three in the Amazon DVD sales chart.
Free is an encapsulation of a current idea. Plenty of products out there already employ this tactic so I’m not sure it is the next big disruptive idea. But maybe I am being picky. As per Anderson’s citing of William Gibson, “The future is here. It is just unevenly distributed”. Anderson’s publisher Random House certainly haven’t subscribed to the idea of giving any Version of his book away for free, be it MP3, eBook, paperback or hardback. But maybe that is what Anderson is trying to push onto the bigger brands. And maybe Random House will surprise us.
Disruption 2: The Grid
Anyone that read Wired 16.09 (The Future of the Electric Car) will be familiar with the broad concept of Energy Technology – adding information to electricity. Climate change, geo-politics, and economics (aka the price of oil) have all led to an ever increasing pool of money with which we can recreate energy models.
Shai Agassi’s Better Place is one such model. It is another Free idea, but this time The Grid is involved. Subscribers get their car for free and pay only for the recharging or exchanging of the batteries to run them. A sort of free to buy, pay as you go car scheme. Contrary to the popular belief that people want to own cars and make them their own, there are plenty of Daewoo & Kia owners in the UK that are testament that, for some, a car equals transportation and nothing more. However making this paradigm shift is a bold move and not without its barriers. Cities need to install a new infrastructure over their roads – charging and exchange stations dotted around the city, close to work, close to home, in your garage and so forth. And currently the infrastructure is limited to about 500,000 cars per city. However, with enough investment and political backing Better Place can be launched globally. It is already due to start commercial sales in Denmark, Israel & Australia in 2012. By shifting away from oil dependency, and into electricity, a vast amount of information is delivered into the grid. Where to place energy and how to anticipate deficits. Energy prices could, theoretically, become more stable. Look out for more on this in the next issue of WIRED.
Anderson covered an array of other topics ranging from Obama’s independence from big business, politicians and indeed his own party, due to his ability to raise independent funds through fund raising 2.0; to the felling of the global economy at the hands of David X Li’s use of the Gaussian Copula algorithm for the mispricing of risk in collateralized debts. Though the ideas of Freeconomics and energy technology in the Grid are the ones that stick out for Anderson as the key players in our future.
Loading ...
I just came across...
Post a comment