Word of the Day: Freeconomics

Today’s word of the day, via Wordspy:

Earliest Citation:

I begin my economics of abundance speech with Carver
Mead’s mind-bending question: "What happens when things get (nearly) free?" His
answer is that you waste them, be they transistors or megabytes of bandwidth
capacity. You use them profligately, extravagantly, irresponsibly. You shift out
of conservation mode and get into exploitation mode. You do crazy things like
offering people the ability to put their whole music collection in their pocket,
or promising the average email user that they’ll never have to delete another
message to conserve space. …

With apologies to Levitt and Dubner, I’ll cheekily call the emerging
realization that abundance is driving our world "freeconomics".

—Chris
Anderson, "The
rise of ‘freeconomics
," The Long Tail, November 26, 2006

Anderson is working on a new book called Free! Why $0.00 Is the Future of Business

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What's been said:

Discussions found on the web:
  1. Jonathan commented on Jun 12

    Yep. That about says it all.

  2. John F. commented on Jun 12

    After another day showing the folly of an economy based on free money, I think I’ll go play a little free tetris online (freetetris.org).

  3. Pete commented on Jun 12

    Somehow I doubt he’ll be backing up his thesis by giving the book away for free.

  4. wunsacon commented on Jun 12

    I recall Eclectic saying something like: the endgame of continual productivity improvements (over thousands of years) is the delivery of goods and services for zero cost.

    That’s provided we migrate to an economy that’s “sustainable” by every measure, including ecological and energy measures.

  5. carl commented on Jun 12

    Yeah, I have been thinking about this too.

    What happens when IP (Intellectual Property) which is harbored by its owner is released to the internet, either intentionally or via malfeasance?

    All information wants to be free…isn’t that our current mantra?

    But what about deep and prodigious source code? What if that gets free?

    What happens to Microsoft (and I am no defender of them) if their source code is absorbed by the Republic of China’s Development Team and ‘Saved As’ Windows Beijing?

    Who is going to pay the massive pools of engineers to write the next generation of software?

    I have no answers but I recognize the ‘push-me pull-you’ dilemma of the power of letting the Jeanie out of the bottle.

    I’ve got IP out there, http://www.transactionlevelanalysis.com and I figure that though we are ahead of the curve, advances in the microprocessor will make everything that we’ve discovered and documented “for internal use only” be just another ‘wasn’t that neat’ once a few more hardware release cycles are behind us and 64-bit is the realm.

    Sticky issue….Do we let information be free and thereby recruit more great minds to development or do we insure protection of IP and continue to propagate the American dream of the rewarding the entrepreneur who risks and invests?

  6. Jim Nutley commented on Jun 12

    Carl,

    Never hire a massive pool of to perform . What you actually pay for is the feudal wars between the 20% of them that “manage” the rest. Instead:

    1) Think of innovative ways do do what you want to do with available resources or technologies. No development means shorter path to pay off.

    2) If what you want does not exist, offer a prize and let some group of grad students somewhere show you how easily or cleverly you can make it.

    3) If that doesn’t work, slash your goal to the lowest useful level and hire NO MORE than seven rock star level people and two to four valet types to cater to them and so they can obsess on your problem. Pay them VERY well.

    Very few single innovations are outside the envelope this checklist can achieve. If you have a multi-step integrated system in mind, apply this checklist to it’s individual components. Those tasks that are still beyond you are the province of governments or science fiction.

  7. AGG commented on Jun 13

    With androids or robots this is quite feasible. With humans it’s a pipe dream because the main reason people covet money is for power over others, not for healthy sustenance. When you can get rid of greed, then of course it can be done.

  8. Andrew commented on Jun 13

    I’m afraid you are all missing the main point of things approaching the cost of free. It’s not about stealing intellectual property, it’s really about marketplaces in which the costs of providing more of a commodity are virtually free. Case in point, hard drive storage space. Google can provide an e-mail account where you never have to delete anything, because the cost of providing one to 6 GB of storage becomes negligible. Instead of charging for the e-mail service, they instead place ads in the frame, and when you click on those ads, guess who makes money? Google does.

    The other way you make money off of free, is that you provide a very good service for free, you allow people to use it for an extended period of time, again for free, and eventually you offer an upgraded premium service that costs a little bit more than free.

    Another approach is to entice people to your particular store or marketplace by offering many free items, which cost you nothing, and then hope that they will buy some of the nonfree items. A great example of this is Apple’s Iphone applications store. Apparently 70% of the applications there will cost nothing to download, the remainder will cost somewhere between one dollar and five dollars. Most people will come for the free applications, but some people will find some nonfree applications which will entice them and Apple will make quite a bit of money from this. Also the availability of free applications will make more people buy the iPhone,and once again Apple makes money.

    One more example and then I will shut up. As the cost of providing cellular network service approaches zero, cellular providers will provide more and more minutes for the same price. Or they will provide many more minutes for a slightly higher price. They are ready do this between customers on the same plan, where it costs nothing to make unlimited calls. If it cost little or nothing to provide thousands of minutes of talk time, then enticing customers to spend $10 a month to get 1000 extra minutes will be highly profitable.

    Now if only someone could apply this to real estate so that I could live someplace nice for free!

  9. Juan commented on Jun 15

    yep, that’s what capitalism has – in the end – been about, creating forces of production which permanently overwhelm those social relations from these forces flow.

    doors to new levels of development, and new constraints, begin to open but the transition is tough.

Read this next.

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