The Rise and Fall of Free: The week in which FREE finally went up in flames

How shocking it was to see those pictures on TV of rioting, looters helping themselves to trainers, plasma screens and mobile phones: brazenly walking into shops and clearing the shelves of more goods than they could carry. How shocking it must have been for marketers in particular. Haven’t we been telling our clients about the declines in materialism in favour of experiences; how there is an accelerated trend in people buying on the basis of ‘values’ as much as ‘value’: and how people are redefining what makes them happy by making more mindful purchases as they start to live with less and adopt a back-to-basics mindset. Well the events of last week seem to have punctured that theory.

What I saw was something closer to what has been described as ‘shopping with violence’ by groups of people who felt it their right to acquire as much as they could to get something for nothing. Some of the looters when interviewed on Radio 4 admitted that they didn’t need trainers themselves they were just taking the chance to get something for free.

But is it any surprise to us that our society has spawned a certain group who feel it is their right to acquire things for free? For how long have we been peddling the ‘magic of free’? From entering a free draw; enjoying a free drink; downloading content for free; and reading our news for free, to free interest rates, and even free housing. Is it any wonder that if you push the concept of free so far, that not only do you end up with freesumers….but freeloaders?

Now, of course, the reasons behind the riots are truly complex and don’t lie in just one area, but the contributing factor made by the marketing of ‘free’ is one element that has been strangely overlooked by the media, preferring to dwell on the political subject of ‘cuts’ than on the economic subject of ‘costs’. But this was a riot cultivated by a culture of acquisition, not of austerity. The evidence is right there before us in the TV pictures of looters: people who have been described as ‘mindless’, who value nothing but their ability to acquire what is not theirs to take. If this is about politics, it is about the politics of price.

Because if you tell people over a long enough period of time that the things they most desire can be acquired for free, you are eroding the very frameworks for understanding value. We can theorise about the post-recessionary changes that are taking place in the ‘value exchange’ but the unkind truth is that in a market where everything is free, there IS no value exchange.

Many a psychological study has been recorded on the effects of presenting products as ‘free’. Perhaps some of the best by Kristina Shampan’er and Dan Ariely’: ‘How small is zero price? The true value of free products’ in which they show that ‘zero cost’ encourages people to act in a much more irrational manner than if they had to weigh up the opportunity costs of something that came with a price tag.

Interestingly, the digital noughties (which perhaps we should now rename the ‘freebies’) could perhaps be held partly accountable for the ‘mindless mindset’ that fuelled some of last week’s events. When Clay Shirky paraphrases Szabo and others who have written on the idea of ‘mental transaction costs’ (the energy required to weigh up what the cost of something might be) he comes to the conclusion that: “The only business model that delivers money from sender to receiver with no mental transaction costs is theft” – or if you like, something that you don’t own but that you can take for free. In the digital world we have an expectation of ‘free’; and as the digital world and the physical world become one and the same thing, can we really be surprised when people have rising expectations that what they want should be free?

Looting online has been going on for ages, and as a society we have been happy to overlook it. But who pays for the data required to freely enjoy a Youtube clip on an iPhone? Who pays to play Farmville; who pays for the ability to send messages via BBM? The answer seems quite clear now: we all pay.

Free has been used as a mass distribution mechanic. And those looters last week felt that some non-digital distribution should be coming their way. This is not at all to excuse that repugnant behaviour, but it is to raise the possibility that in a world of free, where acquisition is presented as having no consequence, that requires no thought – where no one pays, so there is no cost - we are raising not a generation of free-thinkers, but a generation of non-thinkers.

A generation who do not have to calculate risk and reward. A generation that has grown up with free information, free publishing and free distribution at the heart of many of the products it now consumers. Chris Anderson wrote eloquently and convincingly about the new internet-fuelled freemium models, promising us that £0.00 would be the future of business, and that for businesses to survive they should become two-sided and learn to cross-subsidise. This is all true. But it does of course rely on ‘hiding’ the true cost of something that people might believe themselves to be getting for free.

And here’s the rub: years ago, many of the Platonic philosophers, as Ariely points out, were very suspicious of zero: because zero was seen as ‘void’, and since that was a concept that was impossible, neither was zero possible. As marketers, we have used free to mean zero, and the truth is that it is just not possible. Nothing is ever truly free, nor should something we want people to truly value, be flogged as free. We must redefine free as part of a trade, and not as zero. Like freedom itself, ‘free’ is not a right; but a responsibility. As such, it always comes with consequences and we must be responsible enough to spell those out.

The Accountable Consumer

Thinking a lot about the post-recessionary consumer, I went back to John Gerzema's talk on the 'post-crisis consumer'.

It's fascinating really because he gives numerous examples of how consumer mindsets and behaviour has changed as a result of the recession; and also how brands and services are responding to this to deliver to a new set of needs.

His big point really is that consumers are now looking to buy into Value + Values - looking for brands that will deliver both great value and will do the right thing ( a bit of a Triple Bottom Line theme) but this seems a bit high falutin' to me when people can't afford to buy an extra tin of beans, or are having to feed their family for a fiver!

But i think what is interesting is that he is highlighting the themes of responsibility, accountability and sustainability. And he seems to pick up on an important shift taking place in which consumers are starting to, and having to, take more responsibility for their spending. They are de-risking; being extra resourceful in how they spend and on what they spend, often collaborating with others (as we know from collaborative consumption); and (like in the Depression) wanting to get better educated and skilled so that they can make more informed choices - and therefore, the right decision.

So, building on this thought, we could say that we are entering the age of 'The Accountable Consumer'.

The value exchange is indeed changing, away from consumers just expecting to be rewarded with great value; towards an idea in which the consumer takes some responsibility for the scale and type and even timing of rewards that are due them. The consumer might be empowered - but rather than just bullying brands, he can work with brands, to gain an overall better sense of reward. Think of it as 'buying the right thing + doing the right thing + enjoying the responsible thing'. There must be a sense of satisfaction knowing that you have been more mindful in your spending (ie that is an emotional reward that sits alongside the material reward of whatever it is you have required).

No longer are people being sold to. They are an active part of the purchasing process.

It made me think that maybe we are seeing a journey over time from the Age of Excess (pre-recession) through to the Age of Austerity (which is now in 2010/11) and will in turn soon become The Age of Accountability.

Of course, it's not just the consumer who is having to be more accountable; brands are too. Gerzema talks about brands now paying dividends to their customers (we might say 'rewards') and this seems a lovely mirroring of the consumer and brand sharing the same values - and hence both being equally accountable for purchasing - like a 'we're in this together' kind of mentality.

So, we could go one step further and say that the Accountable Consumer will now choose the Accountable Brand. And the Accountable Brand now seeks an Accountable Consumer (one they can build a sustainable relationship with).

And that could be the new value-exchange: one based on shared accountability. ie a shared accountability for spending, saving, - a sharing of responsibility. Consumers now will only have relationships with the brands, services, products, or other people who share the same values. And a brand only has a relationship with fans rather than random promiscuous purchasers - we are all taking more responsibility for what we attract and what we choose.

So let's not pretend consumers are having it all their own way (i don't think any consumer actually feels that!).... It's far more about an accountable consumer than an empowered consumer. A combination of rights + duties, not just rights per se - because that's what got us into this mess, in the first place.

The Apple Toy Company

I have been thinking about Innovation and how to create market disruption a lot lately, and it led me to think about what has made Apple innovation so disruptive. Now the most valuable brand on the planet, it's easy to think of them as a computing company, or a mobile phone company, or as they describe themselves as a hardware company...But are they really any of those things?

The one thing Apple does time and time again is to break convention, bringing to market one after another aesthetically exciting, simple and intuitive gadgets. It's tempting to think that what they do is 'simplicity'. Their stuff is simple (mostly) but that's not what they do. The question is: what is the convention they that systematically break, and why? I think we underestimate the biggest cultural context they tap into time and time again, and that is play.

I think of Apple as a toy company.

It sounds silly but what they did was take the 'serious' work-related PC and give it a colourful twist with the iMac; then they invented the iPOD, making listening to music not only personal but playful - randomness and shuffling bring a sense of playfulness to an otherwise dull commute. And then, the iPhone. They took a 'serious' communications tool and turned it into a TOY. You can flip it around, you can bump it, you can create your own app world on it, and most of all play games on it (little wonder Angry Birds is still the most successful app to date).

They broke the conventions of Technology by thinking about the phone as a toy.

How many people have seen kids pick up the iPhone and intuitively know how to use it? How many times have we shown each other something silly to play with via an app? How many times have we complained that we can't make a call??? It doesn't matter because its 'toy-ness' outweighs its 'phone-ness'.

With hindsight of course, it makes absolute sense that we now see Apple as a toy manufacturer. As we all enter the Data era, and access information as much as we make communication, we can see that the Asian markets were far ahead of us. They built out their mobile brands on the basis of a culture that relies on data; funnily enough that's the same culture that prizes play and gaming as a high priority. In Asia, Technology = Data + Play. ie Toys. Consciously or not, Apple saw this too, and invented a whole new culture of technology usage for us in the West.

So, that's the lesson. "Break the technological taboos by looking for cultural clues".

Any technology, be it washing up liquid, food, or computing can be seen in a new light if we are only willing to break the conventions and challenge the taboos. Embed this thinking into the culture of a company and who knows how successful your next innovation will be!

Subscribers: The new consumers

For ages we've known that the word 'consumer' is not quite doing its job. It isn't explaining the kind of relationship that exists between someone who produces a product and someone who consumes it. That's partly because 'consumption' is often of something that is informative, experiential and participative - it is no longer the usage or 'wasting away of' a physical product.

The new world is going to see us selling a lot more of the former, and a lot less of the latter. The type of product we're selling and people are buying has changed. Forever. And we are as much asking them to buy into the value of our service, as we are asking them to buy into the values of it. Because we all now inhabit the world of experience rather than the world of transmission, because the experience is the communication, we are more likely to be asking people to buy-in to values, beliefs and communities than we are to be asking them to buy our products, packaging and proofs.

And here is the big shift. We've been talking for ages about social media, story-telling, advocacy and earned media, and pondering where it will take marketing. But until we stop thinking of customers as consumers - and recognise the new dynamic and the new exchange, we won't make progress. the truth is, brands are no longer producers, and people who buy are no longer consumers. That model, that "dialogue" model does not work in the information age. The model is more iterative, and involves more than two players. People participate through co-creation and collaboration, feeding back, responding...and even customising the brand. They even "version" the brand for themselves, often advocating the participatory nature of the brand to others. They are not buying something 'off the shelf'. They are buying-in to something in their daily life. So then they are not consumers.

What they are doing is buying-in, and selling-on the brand to others. They are doing some marketing for you. In this way they demonstrate they believe in the same things, share the same values, and are in a sense 'at one' with the brand. Not that the brand cannot exist without them, it can. But they are happy co-authors of the brand.

Subscribing is the New Selling

If we're not asking people to 'consume' because they are in fact co-creating, what are we asking them to do? I believe we are asking them to subscribe.

It's a funny old word, and feels like it belongs to a bygone newspaper or catalogue era of The Readers Digest...but it's not a word of the past, it is the word of the future. As more and more products become services, which is what happens when they get 'digitized', the job of marketing becomes one of getting people to sign-up, opt-in, and if you like 'check-in. The job of the marketeer is one of getting so under the skin of that customer that they can serve up personalised content, at the times when it is of most value....in the exact places it can be most useful...each time and every time. The job of the marketeer is to make the brand an habitual part of life for that consumer, and to make it unthinkable that this is a service one could ever do without. Tell me that isn't what Apple have done.

Apple don't have consumers. They have subscribers. People who buy-in to the whole belief system and community of the Apple designed world; people who are in agreement with Apple's values and its vision for the world; people who are prepared to lock themselves into a system that makes things simple for them; and people who contribute to the whole system by exchanging their data in order for their service over time to be made better and better.

Subscribers:

1. are in agreement with a group

they become part of the audience or community that are like-minded and are signing up to the beliefs of the brand, as well as the rest of the community. They are happy to be identified as part of that community.

2. make a pledge and therefore a commitment

they are ethusiastic enough to think that they will be part of that community for a fairly long time, maybe a year, maybe two, perhaps longer. And they make a pledge, usually written, for the brand to be a part of their world for the forseeable future.

3. make an ongoing contribution

as with any relationship, they contribute, and donate things of value to it. Every month they make a payment but it goes beyond this into adding 'comments' to suggesting new products, to reviewing existing services and to sharing the brand/service with, and through, others. This all has a value.

4. enjoy a relationship that gets better through data

the more personal data that is shared, the better optimised the product will be - both for that particular subscriber but also for the total community of subscribers at large - everyone benefits from the adaption of services from the intelligent use of personal data collected. We used to offer simple personal data on a form (our address, phone number, email) but now we're subscribing to offer up data about what we do, where we go, who we're with.

5. the relationship only ends when they actively unsubscribe

the relationship only comes to an end when the brand we've subscribed to fails to deliver either on the service being provided or to uphold the values we initially bought into. The subscriber is in control. The job of the brand marketers is to never give anyone a reason to unsubscribe from that brand.

Subscription is the new business model

And that is the reason that subscribers is a word of the future. In the past we asked people to subscribe at a product level (do you want this magazine, or that TV channel) generally to receive media content of some kind. Now, we are asking people to subscribe at a brand level (do you sign up to these values, or that data which is of value) specifically to build a relationship over time. Subscription not consumption. Subscribers not consumers. That's the future and it's a long way away from The Reader's Digest.

The new class system: the "knows and know-nots"

I am starting to think that our relationships with technology may well begin to re-draw class boundaries and put in place a "politics of technology".

Smart users of smart devices are accessing all kinds of valuable services that those not on smart devices cannot access or do not want. The irony is that it might be those who cannot afford an iPhone who would most value a 2 for 1 pizza deal on a week night, a free cinema ticket or 10% off high street brands.

If there aren't the right levels of education across the customer base then we could see a class system not of ‘haves and have-nots’ but of ‘knows and know-nots’….which inevitably does lead to a separation between the 'haves and have-nots'

And that makes for friction rather than harmony within society. Not only do those who aren’t ‘smart’ with technology not get the best value; they don’t get a vote. As social media grows and participation in the political and social debates gets more voluble, there could develop a class of technologically-inequipped people who have no voice – or certainly can only whisper when it comes to having their say.

Services that help educate customers in technology are incredibly important in order to share skills and knowledge more widely. One reason why they shouldn’t become a paid for service. The most generous gesture a brand can offer in the emerging world is to offer learning, share knowledge and help transfer skills between people. Otherwise we will be creating a class of people who might be referred to as the informed and therefore 'Influential Elite".

More to come on this I hope, as I think it will be a defining feature of the next few years; whether in mobile; cloud computing, or TV, there will be those who 'know-how' and those who 'know-not' - two classes of people enjoying different levels of access, value and rewards in the post-digital age.

Tweets are news

On twitter, I'm starting to think of it much less as a social medium and much more as a real-time news channel.

When the quake hit NZ I found out on twitter a full hour before the BBC News channel announced 'breaking news'... Moreover, the best way brands have found to use it to date is through time-sensitive promotions, and news about offers.

Equally, consumers seem to be using it for communicating news back to brands about their experiences with their product or service, good or bad.

Of course mostly it's used as self promotion so it feels like twitter is turning into just a set of 'news headlines' - 'a bulletin board for brands' - (whether a corporate brand or your own personal brand) rather than a truly space for groups of people to discuss. In other words a two way news channel which inevitably becomes a sales channel. Interesting.

The Value of Aesthetics

One of the trends we're seeing is the move from believing that creativity exists solely or mostly in the idea, rather than the craft. In recent times, we've been rather seduced by the idea of the Big Idea. We have come to believe that the creative spark comes in the form of 'innovation', rather than 'aesthetics'.

There is a lovely talk here from Paul Feldwick which points to the counter view, and encourages us to rebalance and rethink where creativity lies.

I think this point about 'aesthetic value' is key in developing a 21st Century Brand. And is becoming an increasingly important component of the overall value exchange.

Brands that really work in the new spaces, in useable ways, and delight and entertain us, temd to be those with a heavily thought out 'design' narrative. Whether a technology-driven product like an Apple iPhone, or a human-centric service like First Direct 24 hour banking, there's an aesthetic quality 'designed in' to the brand, the service, the product...the experience. This is 'creativity-inside' and it is about beauty, attractiveness and, above all, sheer magnetism. As Paul quotes Bernbach...'the difference is Artisty' - we may these days call it design (sound design, visualisation, or even 'touch'...) but however we choose to tell the story of a brand it's the aesthetic that tells that story most creatively, and therefore should be designed-in to the very heart of the brand, not just its communications. In fact, it is the communication.