If you give something away for free, why then would anyone buy it? And yet people pay for free every single day. We go to restaurants and order bottled water, or drive our cars instead of riding public transportation. People are willing to pay a premium for a higher quality item (or the perception therein) or for convenience. Free shipping by the slow route, or would you like to upgrade to expedited delivery?
This economic aspect of our collective behavior is so predictable that entire business models are built around it. You can play so-called freemium games like Farmville at no cost, and yet these free apps are earning billions of dollars for their designers. Indeed, the entire bookselling industry in this country is built around the perception of a freemium model. Publicly funded libraries provide no-cost access to reading materials, and yet this country spent $14.348 billion on books last year. Furthermore, we are still spending quite a bit on music even though it is available at no cost via advertising-supported services like the radio, Pandora, and Spotify.
In fact, new data suggests that giving away music on Spotify actually increases sales of the music on iTunes, according to a review by TechCrunch. As Josh Constine reports: “Despite fears that streaming access cannibalizes sales, classical music record label X5 tells me when it launched an app within Spotify and saw streams of one album increase 412% in a month, that album’s iTunes sales shot up 50%. The Swedish label’s ‘The 50 Greatest Pieces of Classical Music’ soon reached #1 on the iTunes Classical charts.” Constine does caution that additional review is needed to see if this plays out for modern popular artists, but seems optimistic about the coexistence of streaming music and download sales.
This isn’t a new concept. Eric Flint, writing as the “librarian” of the free library hosted by Baen Publishing, covered this topic 10 years ago:
The first title to go up into the Library was my own novel, Mother of Demons. That was my first published novel, which came out in print in September of 1997. At the time it went into the Free Library, in the fall of 2000, that novel had sold 9,694 copies, with a sell-through of 54%.As of today, according to Baen Books—a year and a half after being available for free online to anyone who wants it, no restrictions and no questions asked—Mother of Demons has sold about 18,500 copies and now has a sell-through of 65%. [ . . . ]I would like someone to explain to me how almost doubling the sales and improving the sell-through by 11% has caused me, as an author, any harm? The opposite is in fact the case. Mother of Demons began its life as a typical first novel, with very modest sales and sell-through. Today, it has better-than-average sales and much better-than-average sell-through—a change that took place simultaneously with the book being available for free online.