The final keynote of SXSW09 saw Alltop founder Guy Kawasaki sit down with Wired Magazine editor Chris Anderson to discuss the power of ‘Free’. Following the Sarah Lacey debacle last year Kawasaki was brilliant in extracting some interesting insights into financing models for the 21st century.
Anderson talked through a range of subjects including the power of 'freemium', publishers facing the some problems as record companies and what China can teach us about capitalism. Quoting French mathematician Joseph Louis François Bertrand, Anderson claimed that in times of recession market prices naturally gravitate toward margin price and the internet is a massive driver in making this happen.
On his book?
“I reserved the audio book rights to myself.”
“Writers and publishing companies might have a similar relationship in future to what is happening in the music industry with record labels and artists.”
“Each one of us has to figure out our own way to convert our reputation into money.”
“It is easier to achieve popularity than to monetize popularity?”
On free models
“Twentieth century free meant you were going to pay sooner or later e.g. buy one get one free.”
“Twenty first century is really free. It’s based on the economy where they more you sell the cheaper it gets. It’s really free because the costs are close to zero.”
“If you can convert 5% of your users to pay then you’ve covered your cost. Everything else is profit.”
“Thanks to the internet this is the first truly competitive market in history and first market where the price is falling to the marginal cost.”
“Barriers to entry in digital economy are so cheap. Free becomes the natural price for things.”
“Online video games are the best example of fermium users. They let you play the games then charge you for various bits you want to add.”
"Once you install a price you find out how much "stickiness" there is.”
“Paper still matters. Some paper adds value to the internet.”
On Piracy
“If you do not make your product free piracy will do it for you.”
“Don’t expect to make money off your CD. Monetize the celebrity you make from the piracy.”
“Chinese pop stars make money, not off music sales but from making personal appearances, starring in advertisements, etc.”
“What can we learn from China? Ironically China will teach us capitalism.”
Trusting Free
"In the digital space waste is a good thing because it has zero cost. You don't think less of Google because it's free.
“Your expectation of free is based on your last interaction with it.”
“Open-source is free as in kittens: you have to look after them. A lot of the free stuff we have is because we support it communally.”
“New York is driven by institutions, San Francisco isn't driven by institutions, it’s driven by individuals. Driving start-ups. People don't seem as threatened as in New York.”
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