SXSW Keynote with Chris Anderson and Guy Kawasaki
by Alex. Average Reading Time: about 3 minutes.
Keynote session at SXSW, with:
- Chris Anderson — Wired Magazine
- Guy Kawasaki — Alltop
In 2006, Chris Anderson introduced the concept of the Long Tail. His soon-to-be released book will talk about the power of free. Will his theories stand up to the tough questions of venture Silicon Valley venture capitalist Guy Kawasaki?
If you want to create a freemium product, where do you set the bar? You don’t want to cripple the service, but you don’t want to set the bar too high to the extent no one will feel compelled to subscribe to the premium product? Twitter has crippled the product too much, to the point where it’s easy for Facebook to replicate the service and potentially catch up.
Free is the best way to maximize your reach because it lowers peoples’ barriers to entry. Converting 5% of a big number is the business model of free. The marginal cost of distributing a book is zero, so it should be free, since the optimal method of reading a book is still in paper.
Each one of us is our own platform and we each need to figure out how to convert our reputation and brand into money. That’s all of our jobs: build our audience the right way and give them something of value that keeps them there.
The problem is that our publishers are not making money from authors’ keynotes. For example, the music industry is perfectly fine except for one part of it: distribution and sale. The issue is, authors and musicians are now misaligned with their publishers and record labels. The question is, can labels and publishers represent bands adequately in social media?
What if someone follows me and I send them a direct message with a link to a free pdf? Is this a good model? “My test for spam: if I do it, it’s clever marketing. If someone does it to me, it’s spam.” –Guy Kawasaki
The word “free” is one of the most misunderstood words. Free is a word that’s laden with meaning. And the meaning has changed over time. Twentieth Century free is where products had a real cost, so you had to pay back the free quickly. Today, everything costs less to nothing, particularly digital media. Freemium is the inversion of the free sample model. Here, you give 95% of your product free and charge for 5%. Virtual worlds are experimenting with every possible way to charge and 5% of the population seems to be a good model. But people misunderstand how hard it is to convert 5% of people.
China and Brazil are the future of “free”. We have the first true truly competitive market, which is one where marginal costs are low. If you do not make your product for free, the market will do it for you by pirating your stuff. People then use piracy to cause celebrity, and celebrity to create cash.
Could Starbuck’s give away free coffee to attract and retain customers? Absolutely: it would be easy for them to do that.
The word free has a powerful meening in english, where we take the best part of the words (ie., freedom) and apply these associations to sell products. Imagine a flag in your head which pops up every time you hear a price and it raises barriers to you purchase. There is no correlation between free ad cheap. Utility comes first, price second. People now expect two levels from almost product: a simple, free version and a premium version.
Are people more motivated by something they lost, or by not getting something they could? Things that you don’t have and want loom large; that ‘s what tradtional marketing has done. Some information wants to be free and some wants to be expensive. You can have Guy for free on Twitter, or his customized version for thousands as a speaker.
On YouTube, the quality of video is not as important as the relevance. Same thing with companies: nowadays, you can start a company for almost no cost.
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.

