Daily DIY: Understanding The Value Of Free

When you’re struggling to get a career in music going, its often hard to remember that giving your music away free may well be the most important tool you have to gather and retain fans.  In this short video WIRED’s Chris Anderson, who has written a new book “Free” that will be released free on July 7th explains the current “free” revolution.

Anderson believes that converting users of a free version of a product to a perhaps upgraded paid version,  is the key to making money. He sites a 5% conversion rate as reasonable.  So to earn those 1000 True Fans needed to sustain your career, you may need as many as 20,000 on your email list.

How are you using free?

What do you think of the concept?

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  1. love this guy. he keeps pulling ideas out of the air and claiming they are fact & that they work with out much to back them up, and people believe him.
    for the record, i think free does sell, but within a retail framework. how many free tracks have your readers gotten and liked and never went back to buy the rest of the reocrd or antoher track because it wasn’t in a store?

  2. This is interesting. If this is true what will music labels do to survive? What will movie studios do? Offer premium paid services? Will that matter when it comes to forms of entertainment?

  3. to amend my previous post above: He states that on Craigslist no money changes hands(in relation to ad revenue yes, but in to actual posting, he is incorrect: http://www.craigslist.org/about/help/posting_fees) there are fees associated with his free economy.
    he has unproven theories that are provocative but wholly unproven and simply falacious at best.

  4. It seems to me that people like NIN’s Trent Reznor are approaching the answer to “free”. He often offers everything from a free sampler to a $250 limited edition with 3 or 4 price points in between.

  5. Bruce – the big difference btwn the NIN’s & the Radiohead’s of the world is that they already have a fan base and can afford to go the “pay what you want” route. So while they approach the “free” model, they aren’t trying to establish themselves with “free” as Mr Anderson is postulating.
    Mr Anderson’s basic arguement is confusing services and the delivery of those services with actual content/product. Google is a service, music is content, a big difference. His theories also tie into the larger (anti)copyright issue which i am opposed to in general. (he did mention open source in his video)
    Like i said above, i agree with free but within a retail framework that people can easily go and purchase more. For an unknown band this works extremely well. I have seen this first hand.

  6. I’m not a big fan of the “Free” model. I think it weakens the music industry as companies provide core services with no compensation. The artists are the ones that lose out in the long run when the focus of the company becomes, “How do we make this work?” Just provide valuable services, and artists will pay for them. That makes for sustainability.
    I wrote a blog post explaining my position further:

  7. What most people miss – both with the Long Tail and with Free is that Anderson is not ADVOCATING but DESCRIBING.
    Watch the video again. He’s not saying that it’s a good idea to try and give what you do away for free, he’s saying that “this is simply what is happening – deal with it”.
    Yes, Google gives their consumer-facing stuff away, and they are a massively successful company. That doesn’t mean that if you give your consumer-facing stuff away you will also necessarily be as successful as Google. But if you try and charge by the transaction in that environment, you will necessarily fail, because this is just how things are now.
    As the waters continue to rise, Anderson points to the organisations that have learned to swim and breathe underwater. Insisting that you “prefer to walk and don’t hold with all this aquatic nonsense” is not a viable strategy.
    Don’t confuse explanation with cheerleading.

  8. Mr. Dubber, i am familiar with some of your work, you are one of the (anti)copyright stancers which i alluded to in my previous post. We simply don’t agree on fundamentals and most likely never will.
    Google gives away it’s services, not its content. Again do not confuse services & delivery of those services with content(ie: music). Big difference.
    With all do respect to both of you, I don’t think Mr Anderson is describing anything but an abstract idea that fits into his own intellectual world, as do you with many of your own theories.
    And is it me or does it seem disingenuous that Mr. Anderson is not giving away his book “Free” for free?

  9. Agreed. I think Mr. Anderson should provide a “free” version of the book and then we can “upgrade” to the paid version.
    Try that philosophy with a hooker sometime and see where that gets you, to use another “industry” as an example.
    It’s always funny how some writers think many other forms of art should be “free”, except of course, their own.
    What if I were to take some of Mr. Anderson’s writings, or Mr. Dubber’s and simply repackage them (i.e. “re-mix them”), call it by a different name, and sell them as my own creation (“product”). That sounds like a fair deal, right?

  10. Free content does work for some artists and Chris has given examples of it. However, where the theory of ‘free’ is abused or rather misinterpreted wrongly is already played out above in this Comments section, where there are 2 extreme schools of absolutes – one says it is the answer to the ills of the music industry and the other says that no, music should never be be free.
    For some, giving content away for free can result in ancillary revenues, but for others (and this could well be in the majority, especially those who inhabit Chris’ other creation, The Long Tail), giving the shop away with no recourse to ancillary revenues is not an option. And it is in these cases that the intrinsic value of music has to be realized and a direct means to monetize it has to be explored and implemented.
    I have examined this in greater detail on The Global Outpost here: http://www.theglobaloutpost.com/archives/10

  11. I agree Mr. Dubber, as usual.
    Free is happening. You can wish it did not happen, but it did. Fighting is pointless. Just look at the damaging and pointless whack-a-mole strategy of the majors.
    I’m actually amazed that we’re still having this debate This debate,as some pointed out above, needs to be about how to do free right and not if it’s right. It just is.
    And BTW – Chris is going to be giving away electronic copies of Free when it comes in July. I’ll bet he makes free work.

  12. Some ideas I’ve implemented regarding free.
    God knows which are the right ones. But hypbebot is right. The debate about free should now be centred around the best way to be free – not WHETHER we should be.
    In the past (before Radiohead did it) I did something that I called Buskernomics. All my stuff was free in exchange for an email address. But there was a mechanism for chucking money in the hat if you wanted to.
    Now all my stuff is free by the month ie I give away a free mp3 to my mailing list people each month. So they’d pay for immediacy but will ultimately get everything I’ve ever recorded if they wait long enough.
    Not sure this is the best strategy though. My gut says its too much of a barrier.
    Another thought I had was to widely distribute free “try before you buy” FULL versions of songs but which had a brief “DJ style” spoken word: “You are listening to a trial version of xxxxxx. This song is available on CD or download from parrysongs.com”
    Then the song is out there getting listened to – but those who LOVE the song will come and get it without the brief voiceover.
    My thinking was that this would make it more analogous to an ebook (imperfectly inconvenient) and a real book (the ideal). Distributing the ebook free leads to a purchase of “the real thing”.
    My thinking also was that only those who LOVE what we’re doing anyhow are our hardcore surely.
    Someone who has heard the song, and has fallen in love with it, will pay a few pennies to get the song is my thinking. And those who won’t define themselves outside of the hardcore we’re talking about – yet has still had a chance to be because the music is freely out there still.

  13. Bob, the services v content thing is pretty semantic. Surely whats important is how much labour something takes.
    If it takes none (the copying of my music) then it has less value than if it takes an hour’s worth of labour providing a service.
    Content is not intrinsically more valuable than service provision. It all boils down to marginal costs in the end.
    Someone washing my car is a service. And it takes labour. Someone else downloading my music 10 years after I recorded it is content, and involves no labour from me at all.
    The car wash is of greater value than the download.
    As to the NIN have fans, yes they do. But how does an unknown musician get fans if they hide their product instead of distributing it as widely as they can.
    Anyhow, wrong debate in my view. Free is here. It’s all about how to adapt now and do free right, as someone else has already said.

  14. As an example, I started a tiny DIY record label( http://www.bottle-imp.com ), we give away everything for free similarly to NIN, requesting only an email address for the newsletter to get the free music. This conversion rate of 5% seems about right. I need to do the math, but thinking off the top of my head, 5% seems right (though if it is wrong, the number is higher).
    Bear in mind, none of my artists had a built in following. Additionally, all of my artists are creating music in really obscure/subversive styles that are not accessible to a wide audience at all. AND! None of us tour/play out (very often, anyway). We still sell CDs, and quite a bit off Amazon MP3/iTunes.
    So, if I can do it, any band with a good, accessible sound that is doing shows regularly can definitely do it, no question. I agree heartily with Bruce’s idea that it is silly to debate free. Free is here, and it is a powerful tool.

  15. Great example Daniel.
    How many sales do you get per artist on average? And how many downloads?
    Just really interested in the idea that all your income is from sales rather than live gigging, and so wondering what income you are able to generate.
    Interesting too that you are a deliberately niche company.
    Also, do you find yourself offering other stuff than CDs as a key part of your business model. Or do you just rely on the 1 in 20 conversion.

  16. Downloaders want free music. The RIAA wants free police.
    If you don’t want to give it away for free, don’t. You might give it a try though (Ghosts I IV and In Rainbows among others?) it does seem to have certain advantages.
    I’m pretty sure Bruce is right. What is there to debate? You don’t have to give it away, but if it is popular, it will most likely be ‘pirated.’
    The act of sharing music is a social interaction which is so much more powerful than any above board sales promotion. Why fight it?
    Artists with good products are finding ways to make it work.
    The major record labels are restructuring around social interaction platforms.
    Ani Defranco moved 10k units out of her trunk. I just quit a band with medicore sales potential and horrible artwork. In the last week I saw about 20 bad looking cds sold. That’s pretty incredible to me, considering that there is no platform except for the live show.

  17. Alan,
    I’m far from making a living off of Bottle Imp Productions. The project is only a about a year old and started off as an experiment. However, the good news is that I am running in the green, so I am making money ontop of my expenses. My plan is long term, though. Because I deal with electronic acts that do not tour, I need different real life venues for selling to a crowd, so am working on a listening kiosk I can take to conventions (ton of them in Detroit. Anime conventions, comic books, horror movies, etc).
    I need to compile some hard numbers. CD sales are admittedly a bit dismal, but I assume this is because I am not out peddling in the real world much. But iTunes/Amazon MP3 always shocks me how much I make. I also have some other interesting observations that might be useful for other underground artists. For example, the breakcore/DnB type hard electronics gets 10 to 1 the free downloads as my ambient/soundtrack oriented artists. But the sale ratio for the ambient stuff is probably 4 to 1 of the harder edged music. I don’t think this means one is better than the other, as the people who like the heavy breaks just consume music faster. But they help populate my email list.
    I could go on all day, though. Each month, and with each new artist I start working with, things build more and more momentum. I only turned it into a label as a extension of promoting my own music. It’s all quite fascinating. Interestingly, I work a day job. Up until September, I worked for Handleman Company ( http://www.flickr.com/photos/dt10111/sets/72157607606801274/ ), a huge North American CD distributor. They went out of business after 50 or so years in the business. So I’ve seen the direct effects of the music industry not adapting. I understand all the facets of the argument and situation pretty well.

  18. Great point! But digital makes the ‘free’ model so appealing. So much so, I’ve been giving away the songs from my album-a-month project for free since its inception in April 2007.
    Folk do buy the physical CDs though, and free means my work gets heard by a huge audience at Last FM, Jamendo, and Myspace etc.

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