Tuesday, May 06, 2008

The birth of a new economic system? Some are arguing that free may be the new price for many goods.

Anderson’s freeconomics thesis is that more and more goods and services are being provided for free and that those businesses that fail to follow suit are likely to go to the wall. “As much as we complain about how expensive things are getting, we’re surrounded by forces that are making them cheaper,” Anderson wrote in a recent article that will form the basis of a book called Free, to be published next year. “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 (globalisation works in mysterious ways).”

But freeconomics is hardly a deluded eulogy to global capitalism. Rather, Anderson’s idea is that the internet, by reducing marginal costs, encourages businesses to make their money by offering free goods or services to an extent we have not witnessed before. And that this change in supply alters the nature of demand: free services such as Craigslist, Skype, Freeview, Wikipedia and Google have created a generation that doesn’t just resent paying, but expects stuff to be free. This is the generation that, for example, paid nothing (or next to nothing) for Radiohead’s new album and got Prince’s last CD free with the Mail on Sunday. This is the generation that doesn’t walk into HMV like losers and shell out £15 for a new album, but downloads it for free from one of the many (often legally dubious) filesharing websites.

Making things to where you name the price, or “donation” as the case may be, is a novel concept which is becoming more common. It’ll be interesting to see how far this goes.