[cheers and applause] >> stephen: welcome back, everybody my guest tonight is the editor-in-chief of " wired" magazine and the author of the book "free." i still think that's too pricey for a book. please welcome chris anderson. [cheers and applause] hey, mr. anderson, thanks for coming on. please, cop a squat. sir, you are the author of a book called "free." and it costs $26.99. [ laughter ] i love a bait and switch. well done, my man. right up here. ha-ha. suckers! [ laughter ] okay. now the subtitle is "the future of a radical price." what is a radical price zero? >> zero. >> stephen: it's a tough business model. >> free is a paradox. we go online every day, google, myspace, filibuster, twitter. we're told it's all -- facebook, twitter. how it possible that companies can make mey and it's free? >> stephen: magic. i don't know how technology works so to me it's magic. >> it is a little like magic. digital stuff gets cheaper every year. it's deflationary. if you are not making money now, maybe you will next year or the year after or maybe never. >> stephen: maybe "the new york times" will still exist six months from now. [ laughter ] but they give away their product for free. and they are getting their ass handed to them by "the wall street journal" who asks us to pay for their product. how is paying for something not better? you get what you pay for. an old phrase. >> indeed. well, "the wall street jourl" does give away what it does for free. front it's not free versus paid it's free versus preem. >> stephen: what is that? sounds like a made up wd. >> free is -- >> stephen: a little thumb nail picture of the naked girl. >> you upsell to a larger picture. it's upselling. free to get mass recognition. >> stephen: is that the wave of the future? is that the wave of providing services in the future. you get them with the free and premium them up? >> premium up. >> stephen: if i go to a doctor, he will give me all the tests for free but if i want the results, i have to pay money. >> a perfect example. you can do your taxes for free on turbotax. federal. but if you want to do state that is going to cost you. >> stephen: you can do your taxes for free on turbo tax but if you don't want to go toail go to an accountant. >> upsell even further. >> stephen: you can do your taxes on turbo tax. you can invest, you say through -- a free online stock trader. >> used to be that my tax accountant was a person. my stock broke kwrefrs a person. my travel agent. they are software. because of software they can be free. >> stephen: it's not the equal. it's not the same thing. you don't get the same value out of, you know, scotttrade program and let's say -- unless they sponsor me and going to a broker, right? >> exactly which is why we industrial an economy. the things that can become software does. the easy stuff. when it gets harder we get paid. it's good. >> stephen: am i free? >> well, i enjoy your show on your web site. >> stephen: thank you. >> that's free. you are not free to an advertiser. you are preemibly quite expensive to an advertiser, as you should be. >> stephen: i'm almost prohibitively expensive to an advertiser. what is a reputation economy? >> we've always had reputation economies. friends and associates, people we do things for because it staebz a social bond. now we're doing everything on line. we get global reputation economies. i have twitter followers. >> stephen: how many twitter followers do you have? >> 13,649. >> stephen: bite it. i have half a million. [ laughter ] [cheers and applause] now in the reputation economy -- in a reputation economy, i'm way richer than you, right. >> how are you going to mon ties that? that is the question? >> stephen: that and what will get me a cup of coffee. can i twitter send me cash s. that legal. >> twit pay. i believe it's -- >> stephen: some say i get that now. [ laughter ] >> if i doesn't exist it should exist. a perfect example. we're establishing a reputation credit, attention credit. in the media business we understand it's an audience. we sell the audience to advertisers. it's very easy to make money from free if you are a mass media. we're establishing our own attention to credits. how do i turn my facebook followers into a business, my incoming links into a business. >> stephen: that's a reputation economy. you sell your reputation to somebody else. don't you have to be known as a fair arbiter and not somebody selling out? everything knows i'm a straight shooting guy who works hards every day and just enjoys the clean, crisp taste of bud light lime. like that? >> that's how do you it. chris anderson. thank you so much. the book is "free." we'll be right baeiell i was shopping for