Chris Anderson, also of Wired magazine, wrote a very interesting article about the business of “free”. He says, “Once a marketing gimmick, free has emerged as a full-fledged economy”. He attributes this to the falling costs of producing digital content.

“The Web is all about scale, finding ways to attract the most users for centralized resources, spreading those costs over larger and larger audiences as the technology gets more and more capable. It’s not about the cost of the equipment in the racks at the data centre; it’s about what that equipment can do. And every year, like some sort of magic clockwork, it does more and more for less and less, bringing the marginal costs of technology in the units that we individuals consume closer to zero.”

A fantastic example of this would be Radiohead’s album titled In Rainbows that was released in 2007. The band allowed their fans to pay any amount they liked. And yes, that also included $0.00. While official figures were never released by the band’s management, Owsinski’s book on Music 3.0 quoted market research company comScore’s findings to be: 48% of the downloads were paid for, 4% of which paid $20 (the retail cost of a CD) and 12% paid between $8 to $12. These are some pretty telling statistics, that remind us that the True Fan does exist.

In the article, he reminds us that offering a product (such as an audio file, in this case) for free does not mean that you have absolutely zero profits. Instead, he encourages us to consider the idea that providing something for free can lead to something else. Perhaps linking this to Kelly’s 1,000 True Fans Theory, Lesser Fans may be nurtured into True Fans by feeding them with free content; telling them that the artist cares about their fans by rewarding them for supporting their music.