What a WEEK in Pricing!

It has been an interesting week in the world of pricing.

In case you have not heard, Chris Anderson of Wired is set to release his new book Free (the title, not the price), and before it even comes out stirs up a controversy. Surprisingly, the book does not seem to be available on Kindle. Hmmm.

UPDATE: Free is now available for free, at least in audio version. According to a video posted on Wired. Free will be available in most electronic formats for free. The exception is the three hour abridged audio version which Anderson believes has more value than the full-length edition (posted above) because of the opportunity cost trade off of listening to the longer version.

Anyway, first, Malcolm Gladwell chimed in in the New Yorker. Then, Seth Godin responded to Gladwell.

In my opinion, the camp of Anderson/Godin is right and Gladwell is wrong. I think Gladwell misses the idea that free does not mean there is not a business model. He is right that youtube and other free services (Twitter) have yet to create a business model, but that does not mean they never will be able to create one.

Gladwell uses the example of former head of the Atomic Energy Commission, Lewis Strauss’ famous late 1950’s prediction that “our children will enjoy in their homes electrical energy too cheap to meter.” To say that since this prediction has not come to fruition would be shortsighted. Gladwell is right (currently) about that fact that power infrastructure costs are larger that power creation costs, but I can foresee a time when we have personal (or neighborhood) nuclear reactors. This of course will reduce, and almost eliminate, those infrastructure costs.

I would love to hear each of your thoughts on this.

4 thoughts on “What a WEEK in Pricing!

  1. Ed – I love your the concept of value pricing and your contributions to the same but, in the case of free power, I respectfully disagree that it will happen any time soon. It is not a matter of whether it could happen – I strongly believe technology will get us to that point – but whether the current monopolies will allow it to happen.

    There are a lot of people making a LOT of money that are spending that money to ensure that their legacies are perpetuated. In fact, one of the strongest pushes behind nuclear power is that it can be centralized and controlled by a chosen few and not easily or freely distributed. There are too many problems with safe handling of waste materials and control of restricted materials.

    If people really want a personal power system, the government should push towards affordable solar, wind and geothermal installed at the home level (and mandated on new homes by the government). Installation and distribution (wires) is managed at the home level and eliminates the need for Big Power to manage and charge for the service.

    The above opinion may be worth nothing but it was offered FREE for your reading pleasure!

  2. Peter, thanks for your free comment. 😉

    I would never be in favor of government mandates on anything. It is government mandates which make monopolies possible. While I do not rule out solar, wind and geothermal, I believe the best possibility comes from the free market having the freedom to create, not from government mandating anything.

  3. Ed, conmenting on your comment…as an recent visitor to the US I will say that it is a lack of government stepping in to make efficient what the market is unwilling or too slow to make efficient that I noticed and concerned me about the US economy. Case in point, the US banking system is archaic – why are checks still used so widely? Don’t get me wrong, still the land of opportunity, but as an outsider looking in, the liberal ideals have been bastedized by misconceptions of the importance of government’s role in ensuring efficiency of business. The perfect example of what I am talking about is “superstream” legislation in Australia. The superannuation industry was not self regulating towards the use of technology for efficiency. So the government stepped in to force efficiency on the industry. This will save the average Australian business close to 100 hours per year in processing staff’s superannuation contributions. Government mandating has a role in the true efficient operations of the market. My opinion anyway.

  4. Some technologies scale faster than others. But I am not crazy about deregulating the nuclear industry – if we have an accident with one of those, it could destroy lots of land and kill lots of people. I think you have to have some wisdom about freedom or you will just get a bloody mess. I would be against allowing concealed carry for neutron bombs for example.

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