 Hi, this is Gerrit Leonhardt, media futurist in Basel, Switzerland, with another take on Gertube.com. Today, talking about a topic that is quite difficult for lots of people, and that I get asked about a lot, which is the issue of free. In other words, how to get paid. So this is, of course, a very dear issue to lots of people because we're in that sort of switch over phase to where everything that goes on the web seems to eventually become free. For example, what Google has done is they've made email free, which used to cost money. They've made operating system free, which used to cost money. Skype has made phone calls free. Now you can actually get free cars, too, to drive by promoting the rental agency. You can get all kinds of things for free on the web that used to cost money, including, of course, many movies and music. Legal or not, you can get it in both ways. But this is a very important topic. What should be free or not? I just wanted to, before I get into this, on this slide, show you that I think that the idea of a liquid ecosystem to where we can get what we want does not mean it has to be free. I think the question of free really is a simple question. We will pay for things when we see the value. And that has always been true. Now on the web, on the internet, it may be harder for us to see the value, or maybe we can get it for free somewhere else. For example, take the simple case of Google News. If I go to Google News, I can find out what happened half a minute ago. And on Twitter, I can find out what happened 10 seconds ago. So why would I necessarily buy a newspaper to read the same thing that I can read on Google News or my mobile phone? That's a key question. I don't see the value there in that case. But where I do see the value is for having the Wall Street Journalists tell me what the most important financial information is. So I don't need to read that the volcano exploded. That's everywhere. Somebody can tell me what the really interesting shares are, or where the growth is, or some country report in a really professional, curated content. That is something that we can charge for, maybe not for the content itself, but through advertising, through apps, through subscriptions, through bundles. That's where the value is. So it's not this black or white question, very important. Should it be free? Should it be paid? This is also very much a cultural question. Here in Switzerland, many of us will be quite happy to say, well, make music free on the internet. We'll just add it on to the TV and radio license. We'll just pay 50 francs more, and the music is free. Wouldn't be a big debate in Switzerland. I think for the most part would be impossible in America. So this is a cultural question. What is free? What do we pay for? What did you expect to pay for? As you can see in this next slide, Fred Wilson, who is one of the lead investors in Twitter, very smart venture capital guy, he said, free gets you to the place where you can get paid. He did not say free gets you to the place where you can sell more stuff for free. Ultimately, there is a point where people have to be able to pay and where you can invite people to pay, where you can generate value. If you don't have a place to give them something that you can pay for, then it's all free anyway. That's not a good idea. For example, going back to my books, my books are free. The reason my books are free is because most books don't make any money given that I have to print and ship them. So if I make them digitally free, it's pretty much the same to me in most cases, unless I have a hit book, which can be paid for quite nicely with the publisher. But a free book on the internet just loses money, just like the other book loses money, and so it's free. And my benefit of the free book is not the book, but is being invited to speak, doing some advisory work, helping people solve their business problems, and doing other things that have to do with branding. If I was able to write a book that sells a million copies, I'd be quite happy to sell it, which would prove the point, right? So it's not a black or white question, right? Free gets you to the place where you can get paid as a very, very important principle and paradigm of the digital world that we can't ignore. If you look at LinkedIn, LinkedIn is a very powerful tool. I think it's 100 million users now. I got onto LinkedIn very early. Lots of people ask me, why are you doing this? Why are you doing LinkedIn? Now LinkedIn is huge. And most of the people that use LinkedIn don't pay. But the 8% or so of people who buy the LinkedIn premium service, which I did, it's like $20 a month or something, you can email more people. You can use LinkedIn better. I have last year generated $350 million for LinkedIn. So that's a great model of saying, this is how it works. Evernote works the same way. Skype made $500 million last year being free. So you can make money being free. It's possible, you just have to figure out how and where and when to convert. As this slide shows, Netflix is a great example. The most successful example is not for being free, but for charging at the right price point. Netflix charges $10 a month for unlimited movies, renting, rotating DVDs that you can send back and forth to the mail. But now streaming on demand, unlimited library of movies. And why does it make sense? Because basically it feels like free to me. I've spent the $10 when I watch the movies, it feels like free. Unfortunately, we can't watch it in Europe or anywhere outside the US because there's no license and it's IP protected. So there's a story of when things are actually fully liquid and they have the right price point, the right toll booth as I sometimes say. It's very powerful, it's not about being free or not. But of course, Netflix does have a free trial, so it's a good point again in that regard. Another example is Dropbox, which you may know of your Mac user. If you have an iPad or an iPhone or Mac equipment, Apple equipment, then you can drop your files into this box and you can download it somewhere else at some other location like an iPad or whatever else you've got because you don't have a desktop on the iPad, a genius trick there. But what Dropbox is doing, they're saying if you recommend Dropbox to another friend, we'll give you another two gigabyte of storage. So that trick is they pay you with storage which is free to them to a large degree. If you invite your friends to use Dropbox, right? So same idea so that you're paying with somebody else's attention. So you're making a payment but it's still free to you and it's free to them. And Dropbox is taken off like a firecracker, it's just totally absolutely popular. People are already speculating when it will be sold because it's a very, very good way of doing it using a premium. I actually bought the premium package I think 40 or 100 gigs for $50 or something. So very good example of how freemium conversion works. Apple has done a great job of saying, okay, people really pay for what they love. And Jason Fried has said that people are very happy to pay for things that work well, even if they're free options like music, people pay for things they love. This is very important and we have to make them love things so they can actually pay for things which the music industry has not quite figured out. So don't think of free and paid as a black or white thing. Sometimes it has to be free, sometimes it can be paid a little. Sometimes it's ad supported, sometimes it's bundled. There's no black or white answer, right? So please don't phone me up and ask me whether the iPad app should be free. That question can only be answered in context of what you can charge. I mean my philosophy is quite practical here. If you can charge, you should charge what you can charge, right? If it works and if it scales, right? Otherwise free is a great mechanism to get to the place where you can ask to get paid. I think it's about access, it's about relevance, it's about added value. People will pay for value. It's not an absolute question that it has to be free. I think ultimately though, we have to face the fact that on the web, people can compare, they can go to other places. So it's sort of a race for us to figure out how to monetize the content in a way that it generates more and more value going forward. Thanks very much and thanks for listening. Go to my website, mediafeature.com and to Gertube.com and Gertube.net for further videos. Thanks much, bye.