Author zeros in on free future

Chris Anderson says NZ is a pioneer. Photo / Supplied

As editor-in-chief of the influential Wired magazine, Chris Anderson has long been on the cusp of the internet age.

And the 47-year-old author believes New Zealand is well placed to take advantage of global changes brought about by the internet.

In his 2006 debut book The Long Tail Anderson documented how the advent of the Worldwide Web has reinvented the rules of business.

Now in his second book, Free, the London-born, Los Angeles-based author examines the rise of "freeconomics", which he says is being driven by the various technologies of the digital age.

From newspapers to DVDs, clothing and even air flights, traditional business structures are being turned on their heads by an ever-increasing flood of free merchandise.

And every day millions use internet sites such as Wikipedia, Facebook and Twitter without cost. "We live in a world where the online economy is now the size of a good-size country's economy," explains Anderson.

The internet enables smaller, remote nations like New Zealand to close the gap on larger, more centrally located countries as they shift from concentrating on mostly primary goods to more intangible products like films and computer software.

"There's a strong driver for the globalisation of all sorts of things," says Anderson, referring to the move from an economy dominated by items bought from traditional stores that become more expensive over time to the online world, where they get steadily cheaper.

"Ideas export well and can come from anywhere," he continues. "Unlike food, they can be exported with a marginal cost of zero. You can compete with the world and you can compete within the world. That's great for countries that aren't at the heart of the trade routes. If you're far away from Europe, as is New Zealand, you're disadvantaged, but ideas level the playing field."

Anderson trained as a physicist and worked on scientific journals before moving to The Economist then Wired in 2001.

He also runs DIY Drones, a start-up company that develops cutting-edge open source hardware for the aviation industry.

"New Zealand is something of a pioneer in air robotics, geo-mapping and things like that," says Anderson, who will devote his next book to the subject.

"Along with the whole Peter Jackson world, that's one of the reasons that would entice me to visit it pretty soon.

"It boxes above its weight in that respect. It's a global market and if someone's doing good work in New Zealand, I'm going to hear about it."

He says Free was inspired by how The Long Tail was promoted through the endless virtual shelf space of the internet. "It's unprecedented. You have very profitable companies such as Google operating with a default price of zero. I thought there must be an economic model to explain it but I just didn't find one."

Although Free is subtitled The Future of a Radical Price, Anderson also chronicles the history of zero. He recalls how early entrepreneurs like King Gillette pioneered the concept of loss leaders, giving away razors to sell more blades.

He also reveals that in 19th-century America there really was such a thing as a free lunch, as saloons offered free meals to anyone who bought a drink.

"I wanted to put the book into the context of the past because what started as an economics book turned into more of a semantics book," he says. "The meaning of 'free' is so familiar to us from the 20th century, yet it is changing. It's time to rethink 'free'."

The Long Tail highlighted how a seemingly unlimited choice of goods and services is now available, allowing formidable global networks to be created out of previously niche interests.

"There is clearly no debate about the digital revolution any more," he says. "It's not a case of what it should be but what it is. I realise that we stand on almost evangelical foundations at Wired and there were a lot of manifestos in the early days.

"People don't have to be convinced any more that the internet is real and that digital distribution changes everything and individual voices have merit.

"Largely, it's enough at this point to simply report and analyse what's going on rather than preach."

Anderson believes the future will be even more unpredictable. "The last era of free was largely advertising driven," he says. "You build an audience and slap advertising against it. The next phase of free will be all free. Finding ways of offering a free product and a paid product and getting people to shift from one to the other, especially after the financial crash.

"The next wave of this is going to require really clever thinking about how to draw the biggest audience with the free, then find something that people will pay for with the premium. But every product, every company is different. There's no silver bullet."