The idea that you can make money by giving something away is no longer radical. But until recently, practically everything "free" was really just the result of what economists would call a cross-subsidy: You'd get one thing free if you bought another, or you'd get a product free only if you paid for a service.
Over the past decade, however, a different sort of free has emerged. The new model is based not on cross-subsidies — the shifting of costs from one product to another — but on the fact that the cost of products themselves is falling fast. It's as if the price of steel had dropped so close to zero that King Gillette could give away both razor and blade, and make his money on something else entirely. (Shaving cream?)
You know this freaky land of free as the Web. A decade and a half into the great online experiment, the last debates over free versus pay online are ending.
Free! Why $0.00 Is the Future of Business
Posted by dobbie under MarketingFrom http://www.wired.com 6123 days ago
Made Hot by: on March 5, 2008 4:16 am
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6123 days ago