AnnotationFree

Offering things for free used to be a marketing trick and people don't trust this kind of free. Nowadays, under influence of Moore's law of ever improving computation, we see that free is a new economic model. Bits become cheaper by the day and at some point it is best to don't charge anything according to the author, even though it is not really costless.

There are a few ways in which something can be free. The best known model is called cross subsidie and an example is where adverticers pay for a free newspaper. Eventually you pay money somehow. Sometimes cheap things are offered together with expensive things and without realizing it you pay more. An example of this is voicemail. Newspapers can be free, because advertisers are paying for them. The products in the ads will be more expensive and effectively pay for your newspaper. Freemium is free for some, because others are willing to pay extra for a better version. This finances everybody who doesn't want to pay. Things are also free in non-monetair markets. In the gifteconomy people get other kind of rewards. Sometimes people have to work to get something for free. Free distribution force the economy to make things free (as in piracy). Sometimes people get money for a service and it is tested that people spend this money as if it was a gift, even though they may pay for it later.

<<< targeting adverticement is more expensive, so how much is this convenience worth to you? >>> <<< where to read more about non-monetair markets? >>> <<< a negative price is what we want! :) >>>

A more elaborate form of free is where you pay with your reputation or time to be seen with something. In the gift economy you pay by giving your attention, which may give somebody a job when they get really popular.

For family and well known friends money is unnecessary. It is like Google is a friend :S

Giving makes us feel good (but under which conditions)

The substitution effect happens when something gets too expensive. A cheaper substitution will be invented!

Another reason why things are not free is that there is such a thing as "negative external costs". In the case of bits this will be the power use.

Companies need scarcity to make a profit. If there is no scarcity it will be created.

Electricity never became too cheap to register unlike bandwidth, processing power and diskspace. (also see p.145) <<< for software to function however we need electricity >>> Tech is absolutely not free, but the high fixed costs result in low marginal costs.

As long as there is supply we will find a demand for it.

Information wants to be expensive, because she is valuable and at the same time it wants to be free, because it distributes so easily.

<<< there is also a paradox with the popular it looses value and the long tail, it increases value. At the same time we earn more money with popular and less with long tail >>>

Overvloedige info wil gratis zijn, schaarse info duur.

<<< but this is not absolute, because random 1's and 0's may be unique, but certainly not valuable >>>

Traditionaly something else than the info was being payed for. A telephone company doesn't charge you the topics, it only charges the time you spend on the network.

Massive clientele is the way to make money. Free is changing billion industries in million industies, because it's asymetrical competition. Sometimes it's impossible for competitors to match your deal, but you won't make as much money out of it either.

Everybody is allowed to compete, but only a few can make profits (p157). Google is killing local newspapers it is depending on for information. There is only one class, which is the free class. Ads industry is 300 billion. Targeted ads could become 800 billion.

An adsense example that worked (p167)

<<< you can't take away annoyance, because of limited offer (no price fighters), limited profiling (statistics go bad at some point), how much do profiles defiate from most popular anyway? >>>