The Economics of Free

Chris Anderson has written a great article on the future of business — moving to freeconomics, a freemium business model. A must read!

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.

As much as we complain about how expensive things are getting, we’re surrounded by forces that are making them cheaper. Forty years ago, the principal nutritional problem in America was hunger; now it’s obesity, for which we have the Green Revolution to thank. Forty years ago, charity was dominated by clothing drives for the poor. Now you can get a T-shirt for less than the price of a cup of coffee, thanks to China and global sourcing. So too for toys, gadgets, and commodities of every sort. Even cocaine has pretty much never been cheaper (globalization works in mysterious ways).

Well, the pyramids were built without money, (as far as we know,) yet we would consider the pharaohs very rich.

Update (27th Feb): ReadWriteWeb highlights two issues that make the “free” economic model rather worrisome: monopolistic markets and complex transactions.

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