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.

Kevin Kelly of Wired magazine wrote about the 1,000 fans theory, where he claims that an artist only needs 1,000 “true fans” to be successful, and maintain that success. He says:

“A creator, such as [a]… musician… needs to acquire only 1,000 True Fans to make a living.

A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy te super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shrt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.”

He reminds us that this number is not that difficult to achieve because through social media marketing in Music 3.0, the artist has access to a global audience.

Aside from the True Fans, Kelly reminds us that there will also be a group of Lesser Fans. These people might not need or want to follow your every move, or purchase every single thing that you put out, but they are not to be neglected as Lesser Fans can always be nurtured to become True Fans. He suggests that artists do this by connecting and interacting with their fans via networks like blogs, Facebook and MySpace. Work archives may be stored on websites that can easily be referred to by any interested party.