The Age has a good primer for the upcoming wave of "free is good" marketing advice. Chris Anderson (author of "The Long Tail") offered a preview of his upcoming book (out early 2009), and The Age article gives a lot of ink to Anderson. It points to a podcast I wasn't aware of, an interview with Anderson at EconTalk section of The Library of Economics and Liberty. (It lasts over an hour and gets painfully slow at times, but it's worth a listen.)

At the time, there are numerous examples that freemiums, or free samples of limited music, can have a positive impact on sales of a main product such as an album. Coldplay's free download and free concerts, for example, probably had a benefit on first-week album sales of Viva la Vida, although in measuring the impact one would have to correct for the tons of press the giveaways created.

With gasoline prices where they are, the free debate takes on even more importance. A free music model based on the resulting benefit to touring revenues hinges upon the cost of travel. There have many good articles on the topic -- today the Austin American-Statesman has one called "Bands Running on Empty" and The Oregonian's recent article, "Bands on the Run -- From High Gas Prices." Austin and Portland are cities that exemplify the problem bands face when touring the West. Cities, at least the ones that have markets to support touring bands, are separated by great distances. The less popular band that plays in small clubs for $15 or less per head, the very type that would get the most out of giving away music, the one that has limited physical distribution, is being hit the hardest. And there are a lot more less popular bands trying to make it than there are successful bands that can charge $20 or higher.

Anderson himself brought up a key question in the podcast interview: "Do people value something less because it's free?" Marketers will say that's the case, that a higher price can increase demand. That's true with items like luxury purses and university tuitions. Digital music is a different case.

Anderson also spoke about the difference between marginal cost and average cost, although he doesn't adequately address the issue in a music context. This is an important distinction. A Google or Yahoo can double or triple store space in its free email services because the marginal cost of doing so is zero or very close to zero. But music doesn't fit the server metaphor. While the digital distribution of one additional copy of an MP3 has a marginal cost of zero (or so close to zero it's immaterial), there is very much an average cost that needs to be taken into account. While the distribution is nearly costless, the creation, recording and marketing of that music require expenses. Distribution is but a small part of the value chain. Giving away one song (of an album's ten or 12 songs) is costless and may be a good idea in some cases. Giving away the entire product, on the other hand, may not make sense.

The debate over free music will be important. All parties will need to have their say, and hopefully they will experiment often to see what works and what doesn't. People's expectations that all digital music should be free will be shaped by the debate. Will people want to jump through hoops for free music? (There are costs -- time and frustration -- using services like Qtrax and SpiralFrog.) Will people expect musicians to subsist on other revenue streams to satisfy the public's expectation (some would say right) for free digital music? (Give me my free music and maybe I'll show up the next time you play in my town.) Should the fact that digital distribution is cost efficient take away from the creators their ability (some would say right) to set the prices for their finished products?

I am sure about two things: People will pay for digital music, and free music can be used in positive ways. The two are not exclusive. Finding strategies that embrace both will be a challenge that will take us beyond this decade.

Additional reading: "Free! Why $0.00 Is the Future of Business" by Chris Anderson from Wired magazine, February 2008.