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Monday, September 27, 2010

Could EVERYTHING eventually become free?

Well, I'll answer my own question. I think not. The internet has changed the economy of many things related to information. Newspapers have seen a dramatic decline. Most periodicals have moved to publishing online. Things like Facebook, Yahoo, and Google offer many free services. Yes, the economy of the internet is fundamentally different from Adam Smith's view of Capitalism. But, that does not mean that the general trend of the online world will eventually apply to all aspects of life.

There are many services in the world today that are performed by people that cannot be free. It just doesn't work. Even services online offer the "free" tactic to get you into their system, and then they begin to bombard you with "premium" offers that cost money. This is the way a big chunk of Facebook's money is earned, as stated in Fred Wilson's Blog (see Freemium and Freeconomics) Wilson also states this at the end of that same blog:

"The Internet allows an entrrepreneur to enter a market with a free offering because the costs of doing so are not astronomical. And most entrpreneurs who take this approach will maintain an attractive free offering of their basic service forever. But that doesn't mean that everything they offer will be free. That's the whole point of freemium. Free gets you to a place where you can ask to get paid. But if you don't start with free on the Internet, most companies will never get paid."

This is the economy that the internet has created. Most companies online must offer some sort of "free" service or product, but then charge for more of the elite and "cool" gadgets and services that the site has to offer. In fact, when looking at it this way, isn't the internet just following the model of free samples that food companies offer? Isn't the internet just following the model of free cell phones that cellular service providers offer? And maybe, just maybe, the internet is actually more Capitalistic than Chris Anderson makes it out to be.


  1. Agreed. Everyone who works hard to create things of value for others will need a strong incentive to do it, otherwise they'll stop. I think those that generate valuable information will always find some way to be compensated.

  2. I feel like as long as we are producing and creating things that people are going to want to buy and support, the internet will take care of itself. I'm no economics major, so I'm sure I am oversimplifying this matter, but I really believe that if we try to run away from the progression of internet for the sake of the economy, we will end up crippling ourselves, more than if we let our economy grow naturally with this new medium.