Reading this brilliant article from Wired a couple of years ago, which can be found in full here:
Free! Why $0.00 Is the Future of Business, by Chris Anderson.
[He also wrote a book called Free, which I might have to add to my birthday list.]
But just one very great music biz example that he uses under the 'cross-subsidies' bracket of how giving something away for free affects and benefits business...
On a busy corner in São Paulo, Brazil, street vendors pitch the latest "tecnobrega" CDs, including one by a hot band called Banda Calypso. Like CDs from most street vendors, these did not come from a record label. But neither are they illicit. They came directly from the band. Calypso distributes masters of its CDs and CD liner art to street vendor networks in towns it plans to tour, with full agreement that the vendors will copy the CDs, sell them, and keep all the money. That's OK, because selling discs isn't Calypso's main source of income. The band is really in the performance business — and business is good. Traveling from town to town this way, preceded by a wave of supercheap CDs, Calypso has filled its shows and paid for a private jet.
The vendors generate literal street cred in each town Calypso visits, and its omnipresence in the urban soundscape means that it gets huge crowds to its rave/dj/concert events. Free music is just publicity for a far more lucrative tour business. Nobody thinks of this as piracy.
Seriously. Read the article. Very interesting.
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