THE PARADOX OF FREE

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By William Macfarlane

Free is the prevailing business model of the online world

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Giving away services and software is the fastest way to build a large network of users

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And popularity is the currency of the web

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The freeconomy motto:“Be the first to give away what others charge for”

Examples: Craiglist Wikipedia Skype

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- Chris Anderson (Wired)

Ironically, the free business model is making a lot of money

Evernote, Twitter and Facebook are all free and worth over 1 Billion USD

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Consumers get things for free and developers make money for their good work

This looks like a win-win situation

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But, getting things for free comes with a heavy price

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Like privacy

The price we pay for a “free” Facebook is the sale of our personal information, used for user-specific advertising

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"The only way to get around the privacy problems inherent in advertising-supported social networks is to pay for services that we value"

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- Alexis Madrigal (The Atlantic)

Because “when the product is free, you are the product”

- Ellis Hamburger (The Verge)

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There are also significant expenses hidden in externalities- the costs that aren’t reflected in price

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For example, the energy expense of two google searches is approximately the same amount as boiling a kettle of water

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The total amount of google searches in 2011 was 1,722,071,000,000

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This environmental tax is the price we pay for google’s “free” service

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The freeconomy has also brought about serious challenges for the app world

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The price of our free app culture is software that often lacks accountability to those who use it

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Free apps are frequently bought out by large companies, severing the apps relationship to its users

Examples:OinkStamped Punchfork

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"I really liked Punchfork, this sucks. It is a major pain to pull all of my information out. I don’t have the time time to move all 231 Likes.”

- TechCrunch commenter Kevin Rank

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There has been an out cry from developers that the only way for a healthy app culture to exist is if more people pay and more developers charge

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"Whether it’s in advertising, selling your data, or losing the service altogether, I think users are starting to see the cost of choosing free apps and services”

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- Paul Mayne (Day One founder)

We all love free things, but maybe this freeconomy is not serving us as well as one where we paid a little more

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“When the transaction is between you and the people who made the thing you want, there is a great relationship - a responsibility - that you don't get any other way"

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- David Chartier(AgileBits)

The paradox here is that free is just too expensive

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Sourceshttp://www.theverge.com/2013/1/7/3835724/the-price-of-appshttp://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=allhttp://howto.wired.com/wiki/Make_Money_Around_Free_Contenthttp://appcubby.com/blog/the-sparrow-opportunity/http://www.economist.com/node/10094757http://www.theatlantic.com/technology/archive/2012/12/why-you-should-want-to-pay-for-software-instagram-edition/266367/http://smallbusiness.chron.com/advertising-revenue-facebook-13701.htmlhttp://www.forbes.com/sites/gregsatell/2013/02/21/how-much-is-facebook-really-worth/

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