Google CEO: Free is better than cheap

Google CEO Eric Schmidt has been interviewed by mckinsey quarterly. In the forward looking interview he touches on a number of things that are relevant for picture buyers and sellers. One of the first things he addresses is the increasing pace of change:

The harsh message is that everything will happen much faster. Every product cycle, every information cycle, every bubble, will happen faster, because of network effects, where everybody is connected and talking to each other. So there’s every reason to believe that those who are really stressed out by the rate of change now will be even more stressed out.

Schmidt goes on to adress the Long Tail, first coined by Chris Anderson of Wired magazine and then broadly adapted. About the longtail he says:

So, we love the long tail, but we make most of our revenue in the head, because of the math of the power law. And you need both, by the way. You need the head and the tail to make the model work.

He then goes on to talk about the role of free products in businesses. This is particularly relevant for photography as free options are ever more widely available.

Free is a better price than cheap. And this simple principle has been lost on many a business person. There are business models that involve free with adjacent revenue sources. And, in fact, free is a viable model with branding [advantages], [charges for] service, and other things. But it’s a different business model from what most of us are used to

People have to accept that, at least in the digital world, the cost of transmission and distribution, is not going to go up. It’s on its way down. The people who build physical devices that connect to [transmission and distribution] will eventually morph their models into more of the prepay model, because it will be more consumer efficient.

The prepay model discussed in this last paragraph is particularly interesting and he says more about it in the full interview. As mentioned on Fast Media Magazine before it’s important to think outside current business models and look for new ways to package and price photography. The interview is highly recommended reading.

Marco | Editor

Editor at large and founder of a bunch of stockphoto businesses

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