Wednesday, April 9, 2008

It's all free

I've meant to write something more about Chris Anderson's appearance on Charlie Rose back on March 6th. I commented back then how impressed I was that Charlie actually expressed skepticism about Anderson's iPhone model for the future of business, "designed in California, made in China." (There are two threads here, Anderson's myopia that this was a viable direction for the American economy, and Charlie actually getting contrarian. Of course, Charlie gets that way only when dealing with other journalists; whenever someone else, like a CEO, is on, Charlie mostly lobs the softballs. I guess we'll take what we can get.)

What I didn't get around to posting were my thoughts on Anderson's main point, that we're moving to a new free model for everything. That is, business will be driven by giving away things, much in the way that we all use Google and pay nothing for it. Microsoft will be forced to a free model, according to Anderson, in which they won't sell copies of Office, but be forced by market pressures to give it away. "The truth is that zero is one market and any other price is another. In many cases, that's the difference between a great market and none at all."

Of course, if you're giving something away, it's not actually part of a market at all, but that requires you to understand the nature of a market. While it may be true that transistors are virtually zero-cost, and Google can give you unlimited storage, it is not clear that Google mail space is actually part of a "market." Their revenues come from somewhere else, which allows them to subsidize this no-cost storage.

That's about as far as I got with my notes for this post originally, then I wandered off to other things. But I've been saved by Hank Williams (no, not that one), who has eloquently deconstructed Anderson's argument in a post on his blog, Why does everything suck? For those more interested in the economic aspects of life, there are some posts there you'll probably want to skip, but there are some really well thought-out ones about the new economy (and interesting ideas about more technical matters as well).

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