Friday, February 29, 2008

Freeeconomics ... It changes everything

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Recently ran into this article "Free! Why $0.00 Is the Future of Business"by Chris Anderson at Wired Magazine.

Now while on the surface I dont buy what this article is trying to say, cause someone always has to pay and there is no free meal. There is a growing perception these days on the web that onlines services should essentially be free and if there is a cost associated to a service your best bet to fame is by offerring a free version of that same service.

I think whats going on today on the web is a great deflection economy where the consumer of the service is being funded by the vendor based on the revenue it might be getting from another consumer or advertiser. So the consumer is left with the perception that what they are consuming is essentially "Free". Now wasnt that going on already with ad based community magazines that were available for free. I guess todays online service providers have taken that model and optimized it to their benefit.

Here's the Taxanomy of free that Chris has listed.

What's free: Web software and services, some content. Free to whom: users of the basic version.
What's free: content, services, software, and more. Free to whom: everyone.
What's free: any product that entices you to pay for something else. Free
to whom: everyone willing to pay eventually, one way or another.
Zero marginal cost
What's free: things that can be distributed without an appreciable cost to
anyone. Free to whom: everyone.
Labor exchange
What's free: Web sites and services. Free to whom: all users, since the act
of using these sites and services actually creates something of value.
Gift economy
What's free: the whole enchilada, be it open source software or user-generated content. Free to whom: everyone.

Click "here for the complete article.

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