Wired Magazine, Chris Andreson believes the "free economics" will define the digital economy. Three technologies that we have increasingly seen become ubiquitous are: bandwidth, storage and processsing.
We have seen tremendous shifts with the costs of transitiors and computing processing powers move from tens of dollars only a few decaes ago to being valued at less than 0.00001centrs and hence almost free to the consumer.
This has never happened before so with the web based economic world and increasingly rich array of producrts of services available on the web. For example we seek Yahoo offer unlimited sotriage capacity for no cost at all to users. Google also offers its applications free to single users and teh storage needed as well. We are seeing products liek wthe Wall Street Journal which may only need 1% of its online readers to subsrice to premisum content in order to subsidize - give away most of its content for nothing, while still making a profit.
Eventually --- there's a compay that is making electric cars and is selling the electricity that Chris Anderson describes in his new book Free to be released in 2009. In time, he predicts that movies will be free with expensive popcorn, other companies will follow the Google model, where advertisers pay to get noticed, but their products are virtually free.
On the web, distribution models are almost free and access is to over 1.2 consumers that conduct commerce on the web. Anderson argues that technology has made many products incredibly cheap to produce. And once they are cheap, they can be given away for free. And providing a free product isn't just offering it at a lower price than a competitor, it's employing a completely different business model.
"From the consumer's perspective," Anderson wrote, "there is a huge difference between cheap and free. Give a product away and it can go viral. Charge a single cent for it and you're in an entirely different business, one of clawing and scratching for every customer."The truth is that zero is one market and any other price is another. In many cases, that's the difference between a great market and none at all."
Irrespective of whether Chris Anderson's predictions are accurate, one cannot refute the realities of increasingly lower cost digital distrubution models. Many examples of offering free that emerged as a full fledged economy include:Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of MySpace bands that grasped the audience-building merits of zero.
The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multiplayer online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.Even the OpenSource movement, and companies like RedHat helped innovation to occur by bringing legitimacy to free.
The rise of "freeconomics" is being driven by the underlying technologies that power the Web. Just as Moore's law dictates that a unit of processing power halves in price every 18 months, the price of bandwidth and storage is dropping even faster. Which is to say, the trend lines that determine the cost of doing business online all point the same way: to zero.
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