The Taiwan Bicycle
Manufacturing Industry Review

Free bikes for everyone?

Glenn Reeves

A post from Bike Snob touching on the issue of ‘free’ and the remarks from a commentator on the post–who mentioned Chris Anderson’s recent book on “Free” as the business model of the future–led  to the following line of thought.

Picture this. You see a great new bike at the shop. It’s just what you want, so in you go, get a good fit (gotta make sure they do that for you), decide on the components, get it assembled, take it away. The bike was obtained with a price tag of zero. Is this a possibility?

Well, phone companies were doing something of this sort a decade back. Cell phones were the coolest thing around, very high on the funky scale–the great shift towards mobile communications had begun. Sign up for a 12 month, 24 month or longer, plan, guestimate your level of monthly usage, then choose a monthly rate. You get the handset for free.  But of course, not exactly no strings attached; you certainly ended up paying for the handset.

Better Place can get you a car for free. When you include maintenance and running costs, as well as interest on funds borrowed to purchase over the time you own it, and depreciation (the real downside), its a heap of money. Better Place argue that there is a way around this.

What they have in mind is EVs (Electric Vehicles). The underlying business model works provided gasoline prices inflate faster than electricity. They lease you an EV for free. You can recharge at a special station or swap your power pack over for a fully charged one if you’re in a hurry. In short, the company makes money by taking part of the difference between the cost of electricity and petrol, as long as the second, to reiterate, increases faster than the first. Given the move towards sustainable electricity generation solutions in a post fossil-fuel economy, the model looks good.

Now, if Better Place can make this happen for cars, then it could be made to happen for LEVs. And it’s an understatement to say that LEVs are at the center of attention at the moment. Probably the key issue with the LEV is the power pack technology. But let’s assume this will be solved in the near future. LEVs could be made available free. A company manufacturing a particular model could generate revenue by providing the energy to power each vehicle, similar to the Better Place offering in relation to cars. But a bicycle, as distinct from an LEV, is difficult to fit into this business model. And there is also Phil Wainewright’s view that Free is not a business model at all to take into account.

Let’s look at it from another angle. Jeff Jarvis has recently put forward the view that the Google business model is the model for the future. Very basically the idea is that, like Google, you simply become a platform for consumers to get what they want, or to ‘organize’ themselves, so they can reach their goals, whatever these might be.  The boundary between customer/consumer and producer/company/manufacturer becomes blurred. In this zone, collaborative communities of interest form in which people create things together. These ideas also neatly connect with recent ideas about branding (see for example Marty Neumeier’s The Brand Gap), where a brand’s value and content is produced by its consumers.

One of many examples to illustrate these ideas that Jarvis gives is that of the ‘open source’ car. You can have your car any way you want it. Components would be supplied by a mass of artisan producers each doing their own thing in collaboration with others, and perhaps you. They are your consultants in building the car you want. This means you wont be forced into accepting a mass-market production model; you get a vehicle which suits your needs and who you are. To put it another way:the aftermarket is the only market.

Bicycles? Bicycles in the present are basically the product of OEM suppliers, a mass of interlinked and, often simultaneously, competing operations producing components, and bits of components. Their customers, the bike brands, have an enormous range of offerings to choose from. Their choices come together to form the bicycles the cycling public purchase. When you order a new bike from a shop, you are faced with a rather limited range of choice. What if an advanced degree of dissolution of the boundaries separating brand/business/OEM suppliers/consumers occurred? OEM and the aftermarket become one (talk about Buddhist economics!).

A bike business, then, could be in the business of providing information on the possibilities for bike building, which could be endless, given the assumed collaborative nature of this imagined (at the moment) production process. It would be a development of what most bike shops are doing already. And such a scenario is very much in the spirit of the current move away from the mass-market towards a truly niche market, an almost infinitely varied aftermarket. It is also in a sense, a return to the idea of the artisan bike-maker ala Bianchi. Except, instead of production being concentrated in one small operation at one locale, there would be a bit of Bianchi in everybody who became involved in the production process.

But how would a bike be Free if things turned out this way? Perhaps members of the community would subsidize each others’ contribution in the productive process. This could be in the form of a subsidized bike made available for those who contribute to its making, or the parts, or frame geometry/design that go into models of various kinds. Here the bike enthusiast community would become a consultant to OEM suppliers, who instead of saying “This is what we will release for next year’s production” simply ask the community “Tell as what you want”.  The vision here is of a world of unique bikes sharing family resemblances (the ‘brand’). But, the bike is still not yet free. Hmm.

Let’s go back to Jarvis who develops  the idea of the open-source car a bit further. What if a car company is not actually in the business of manufacturing cars of all, but of moving people around–its most fundamental reason for existing? Extending this to the bike business, then, a free bike is a bike that is made available by a bike company whose job it is to move people around,  say in the urban environment, or as a better reflection of the niche nature of this process, in a particular urban environment for a specific purpose. Or mountain biking or cyclocross in a specific location, or a specific terrain. They give you access to the vehicle you want, at the place you want it, when you want it. The access to this service is what they charge for; the bike is free.

This is a rather weak example, I’ll be the first to admit. Talking about an open source productive process is to talk about a collaborative production process involving complex webs of interacting producers. The consumers and producers are inter-related in new and complex arrangements.  The example does not reflect this. And it also raises the question: what you charge for is maybe just a matter of definition. And maybe we end up back with Wainewright’s charge that Free is simply not a business model, but a just a nice gesture or marketing trick.

Just some thoughts. It’s something I’ll come back to in the future.

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