That last one will drive you out of business, so I would suggest avoiding it. The other two are where the largest opportunities are. Godin’s blog post was referring to the fact that with the internet, musicians, freelancers, solopreneurs and small businesses are better equipped, and connected, to be able to handle more of their own stunts--so to speak--to bring their products or services to market.
Thus, to stand out you, and/or your company, must be better than the competition. Perhaps you offer a better product, more efficient service, an easier-to-use service, maybe you save customers time, etc. Or, maybe you’re different. Maybe your product/service fulfills a common need in an uncommon way, or your product/service saves a business X amount of money compared to competition as proven by market research, etc. Now, if you do compete on price you’ll really want to justify offering a lower price than competitors. A lower price is not always equated to a quality product/service. Plus, if you compete by offering a lower price than competitors you’ll want to make certain you’re making up ground on volume or some additional revenue stream because that’s a difficult business model to maintain without being swallowed by a company willing to give away more for less (or free).
Probably the best advice is to be both better and different allowing you to justify higher prices than competitors, which will further the perception that you’re better. Hey, two out of three ain’t bad...besides the third option is likely to sink you before you get out of the gate...just a few thoughts to consider.