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The rise of ‘free’

Business | Technology

Microsoft last week released their Essentials security software, giving free basic protection against viruses, trojans, rootkits, and spyware and all those other nasties from the internet. This time they have learned from the previous mistakes that resulted in large fines and have not bundled the software into the operating system or such like. Instead the only requirement for the downloaded software is that it only runs on a genuine copy of Windows, thus cleverly integrating with existing initiatives to reduce piracy of paid for software.

But is Microsoft really embracing the new free model proposed by Chris Anderson. To do so would mean that there is a paid for model in there somewhere because the two need to co-exist. And it doesn’t appear to be adopting the nearly free model so successful for Apple and their apps vendors, charging loose change for functional and/or fun software and entertainment. Anderson’s concept is basically an extension of simple economics, but with a twist. Expand the market, to develop both brand recognition and market share, by delivering something of value in the hope that audiences will be willing to pay for the premium or live or full fat version. His point certainly has mileage with music, entertainment and software and even applies to the fashion and luxury goods arena. Most people that buy fake Rolex watches are unlikely to buy the real thing anyway. But a few will and as will others who would only ever want the real thing. So in a way knock offs are cheap marketing.

In the media sector, the Murdoch empire has recently been complaining about free in the guise of the BBC in particular and the internet in general in the wake of falling newspaper sales and advertising revenues. But much of the frustration must stem from an inability to make free work while charging the right amount for the added value bit. The nub perhaps is that there is not much added value.

Similarly as software continues to move to a cloud computing or software as a service model, as demonstrated by IBM entering the fray with this week with LotusLive iNotes, the free model will impact the industry and cause businesses on both sides of the supply chain to evaluate where the real value lies.

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