VidFest 2008: Keynote with Chris Anderson

Chris Anderson, editor in chief of Wired Magazine

is the Keynote speaker this morning at Vidfest 2008. Chris is speaking about how 0.00 is the future of business.

The Future of Free.

The Internet is the only place that there is a zero margin cost of distribution. Free is entirely different than any other cost. Lowers the barrier of entry, increases waste and there’s an explosion of creativity.

What are the economics of Free? What are the economics of abundance? Chris is writing a book about this very question.

Newspapers aren’t selling newspapers, they’re selling audiences to advertisers. The media business is essentially free. Radio is free to air. TV is free to air. The act of you writing a check for the magazine is a act of interest so that the magazine can prove to their advertisers that they have a committed audience. The cost of a magazine subscription is not at all based in any sort of economic policy at all.

When things get too cheap to meter (like electricity, as they thought in the 50s), they are virtually free.

We need to put technology in te hands of the world so they can tell us what it’s for. The first resource that is so cheap that it’s essentially free is computing power.

The second one that is so cheap it’s essentially free is storage. We need to find a way to waste storage. Chris’s kids have a computer with a terabyte of storage. His nine year old has twice as much storage as his huge multi-million dollar company.

Bandwidth is the third thing that is essentially free. It doesn’t cost you anymore to reach 2 million people than it does reaching 1 million people. Because the previous economic model was that you could only broadcast a few things to those 2 million people, you had to invent mass media and try to find something that appeals to everyone. The reality is, not “Everyone Loves Raymond”. Everyone might kinda LIKE Raymond, but… meh.

The things that mark us as individuals are the places we disagree on, but the market of scarcity is where we end up with this mass media, dull, boring media.

It costs 1/4 of a cent per person per hour to stream video, and when it’s that cheap, it’s easy to waste YouTube’s processors, their storage and their bandwidth with your home videos, your snow boarding videos, your goofy bar conversations.

The future of television is LonelyGirl15. Sure, she’s an actress who was trying to jump start her career, but she had a similar audience to “Everyone Loves Raymond” at her peak. She’s a character who would never be approved by the traditional mass media powers that be. This is not something we ever expected to see, but every experiment that can run, will run on the internet.

This economy of free allows us to maximize the potential space and see what sticks. Most are not viable, some are extraordinary… the only reason that this is even possible is because we’re wasting processing, bandwidth and storage. There’s no gatekeeper or approval process, and that liberating feeling of free is helping us figure out who we are as a person. When there’s no one that we need to get approval from, it allows us to experiment and do whatever we want.

In a competitive market, price falls to the marginal cost.” if you write down only one thing from this keynote today, this is it. What if the marginal cost is zero? (or so close to zero, that someone will treat it as zero) Everything that can become digital will become digital and everything that is digital will become free.

Let me repeat that:

Everything that can become digital will become digital and everything that is digital will become free.

Turns out there’s a price even lower for free – paying people to use their service. Chris thinks we’ll get there. But basically the threshold of free has been reached.

Bill Gates has always known that his products do not cost much to create, but Microsoft fought free with their monopoly. Remember the original statement: “In a competitive market, price falls to the marginal cost.”, and yet, Microsoft is still selling office for $300. Hrm.

We’re coming into a world of non-monetary economies with incentives other than cash. Blogging and other ways of finding incentives through recognition, attention etc.

Every abundance creates a new scarcity. Time + Money +…. Attention. The only way you can make money is in a market of scarcity, but the majority of the opportunities are in the free and abundance market.

We’re about to move into the Q&A shortly, so I’ll publish this now, and add my images, and maybe the audio from Heather later.