Google sums up free economy

By ETCO

Source: Agência Sebrae de Notícias - AL - 19/08/2009

English journalist Chris Anderson, 49, editor-in-chief of Wired magazine since 2001, became famous in the world of business and technology in 2006, when he launched “The long tail” (in Brazil, “The long tail”, Campus editor).

In the book, he explains the digital economy based on cases like Amazon.com, which has transformed itself from a virtual bookstore into a kind of gigantic warehouse for internet commerce. Now, he analyzes the digital economy from a bold thesis. His new book, "Free" (in Brazil, "Free Free", the future of prices), tries to prove that the future of business has a "radical price": nothing less than the free offer of products and services.

Agência O Globo - Isn't it a contradiction - for someone who made the work of the internet a profession - to defend the idea of ​​offering free services and products to increase profits?

Chris Anderson - Yes, it is a paradox. We have the impression that offering something for free is opposed to profit. Everyone asks the question: who will pay the bill? But Google is an exemplary case of the free economy and it doesn’t weigh on your credit card account… Many claim that “Google loses a lot of money with YouTube, but nobody notices that, thanks to YouTube, Google has an audience worldwide for text and video messaging. And when traditional TV audiences move permanently to the internet, YouTube will be ready for it. The market dreams of what is free: free consumers, in a free market, want free products and services.

AG- Your book “Free” mentions Brazil and China as the frontiers of the free economy, due to the strength of piracy and street vendors. In the Brazilian case, Banda Calypso is cited as a business model.


Are Brazilian street vendors a business model for the future of capitalism?


CA - Banda Calypso is not the only existing model for the music industry, but it is a very interesting business model to think about the strength of free. I was impressed to walk around São Paulo, which I know well, and to see that the band allowed street vendors to sell their CDs and DVDs at such a low cost that, in practice, it was free ... Banda Calypso prefers to make money at shows, and the gesture of giving CDs and DVDs to the public helped to popularize the band's name and make the tecnobrega music shows a commercially viable genre.

AG - You mention former Culture Minister Gilberto Gil, who released a CD on the web, and writer Paulo Coelho, who pirated his own books. But there is a huge difference between a stage artist and a writer ...


CA - The case of Gilberto Gil shows that an artist who was a minister has a very acute understanding of the transformations that are now taking place in the market.


And that the Brazilian government is also attentive, as revealed by the free medication program for people with HIV.


Brazil has become one of the largest global markets for generic drugs, which also shows the strength of the free economy.

AG - Could Paulo Coelho's editorial success serve as an example for writers?


CA - Certainly not. Paulo Coelho has books that have sold a hundred million copies, such as “O Alquimista”. But the fact that he invented a website called "Pirate Coelho" to pirate his own books and allow his stories to be downloaded for free shows that he is an author who knew how to understand that the internet would not inhibit and, rather, boost sales. He faced the publisher Harper Collins and caused the controversy that led to the publishing success of his books. It was a marketing strategy.

AG- And how will authors of books who do not have Paulo Coelho's editorial success survive without the internet?


CA - Well, there are several kinds of internet writers. Philosophers will need the Academy to survive ... In the case of journalists, it will be a little more complicated ...

AG - Do you consider that news, media and journalism are things of the last century?


CA - No! I do have problems with the words "news", "media" or "journalism". I think that if we use these words only in their commercial context, we will be limiting our understanding of the new technological scenario in which the information is produced. We need new words to define what is happening today. What we call social networks, which are made up of thousands of blogs, websites, twitters, also produces information and free delivery for users ...

AG - But does this mean that professional journalism is on the verge of extinction? That communication companies will disappear?


CA - Communication companies and journalism professionals must rethink their business and activities. The problem is that social media distributes information on the same platform that is used by media companies. Today, much of the information I read, hear and see in videos on the internet is not produced by commercial companies. So there is competition in the production of content that journalists and companies did not count on.

AG - Does this mean the disappearance of the journalist or the media as a business?


CA - No way. It means that companies will have to rethink their business models to make them commercially viable. And journalists will have to offer something that amateurs and internet amateurs do not… Media companies no longer have a monopoly on access to information and this is a big change. This is true for newspapers, TVs, radio, film production companies, record labels ... Finally, it is valid for the entire cultural production industry.

AG- Do you think that the website templates of "The economist" and "Wall Street Journal", which are partially free, would be a way for companies?


CA - Both have a model that I call “Freemium”, in which part of the content is free to attract readers and part is paid for by readers and advertisers.


This has been a model that works today. But each case is different, and what counts for one company may not work for another…