Mark Cuban Remains Confused About Free
from the wait,-what?!? dept
Last week, in writing my review of Chris Anderson’s new book, Free, I noted that Mark Cuban’s initial critique of it was quite misguided, in that he made the quick (and flat-out incorrect) assumption that the story of “free” means that “everything is free,” and thus it ignores costs. That’s simply not true, and thus represents a big strawman that ignores the actual point of the book (though, to be fair to Cuban, it’s a very common strawman found in many of the arguments against the book). Cuban has now taken a second shot at critiquing free, and I’d argue it’s at least more interesting on a first pass, pointing out: when you succeed with Free, you are going to die by Free. That sounds like a worthwhile read, though I find it hard to believe. Here’s the meat of Cuban’s argument:
Lets look at the rule that eventually KILLS all freemium based content plays:
There will always be a company that replaces you. At some point your BlackSwan competitor will appear and they will kick your ass. Their product will be better or more interesting or just better marketed than yours, and it also will be free. They will be Facebook to your Myspace, or Myspace to your Friendster or Google to your Yahoo. You get the point. Someone out there with a better idea will raise a bunch of money, give it away for free, build scale and charge less to reach the audience. Or will be differentiated enough, and important enough to the audience to maybe even charge more. Who knows. But they will kick your ass and you will be in trouble.
I don’t think anyone denies any of that. Except… here’s the main problem that kills Cuban’s point: this applies to any company, whether it uses free or not. What he describes is not unique to free. It’s the story any company faces, and we’re seeing how the companies that have “embraced” free have acted as that sort of “black swan” competitor to the companies that haven’t. Look at what is happening in the recording industry or the newspaper industry, where they’re struggling to understand new models.
Cuban tries to suggest that this is something special about the “free” space, but I can’t fathom why it’s any different than any company:
Its not that they can?t make money offering free. They can , have and will. The problem is that they know that its literally impossible to be the king of the mountain forever. But that won?t stop them from trying. And that is exactly what will kill them.
“Free” is just a price. If the cost of your product is $3 and someone figures out how to build a competitor for $1 (or free!) then you face the same problem. In fact, I’d argue you’re better positioned to adjust if you understand the basic concepts behind free (which Cuban either doesn’t, or he’s bluffing for some odd reason), because it suggests you know what parts of the business to leverage as a resource, and which to charge for. So, I’m confused. What about what Cuban says is specific to “free” business models and why can’t those who embrace “free” adapt if he seems to believe that others can?