March 31, 2010

Freeconomics: FREE is not an option but a foreseeable destination

Posted in Uncategorized at 7:26 pm by ellebourgeois

After a few years of experimentation, in 1895 King Gillette introduced the disposable razor blade, but to his surprise it did not take off immediately. Over the next two decades he desperately tried every trick in the book. Razors were coupled with everything from gum to marshmallows, and these freebies helped to sell the marketed products while creating demand for disposable blades. This business model has laid a strong foundation for entire industries, and is the result of shifting costs from one product to another, otherwise known as cross-subsidy. This is a prototype that contemporary society is very familiar with: Give away the blackberry at $0.00! And sell the pricy monthly plan, make the Wii system cheap and sell expensive games. Once a marketing gimmick, free has emerged as a successful market, based on the reality that the cost of products themselves is falling fast. The rise of “freeconomics” is driven by an underlying principle, Moore’s Law, which dictates that a unit of processing power splits in price every 18 months, and the cost of bandwidth and storage is dropping even faster. Every year the equipment does more for less bringing technology, in the units that individuals consume, towards zero. Although process power, storage and bandwidth are three very innovative substances there is a lot to learn about them, but we are a certainly on the road to discovering a new world.

We know this freaky land of free as the Internet where endless amounts of resources, from Vogue Magazine to Facebook, are available with the click of a button. Particularly Western society has become so accustomed to downloading endless albums off ITunes, or signing into to watch recently released movies, that the thought of being directly charged for anything online is seen as waste when there is almost always a cheaper alternative. This digital age is fairly recent but strongly taken for granted. Walter Benjamin discusses the “Work of Art in the Age of Mechanical Reproduction”, and uses the word aura to refer to the sense of awe one experiences in the presence of a unique work of art. With the advent of technological reproducibility, the experience of art, music, movies, writing and more, has been freed from its natural place and brought under the gaze of computer audiences. If this and more, comes at the zero cost, does this not further diminish the value, worth and ritual of something material turned digital? Who cares about waste and the loss of originality? When everything is free, it can be easily refreshed, downloaded and renewed.

Carver Mead identified the solution to Moore’s law of ever escalating computing power; we should start to waste transistors, a semiconductor device used to amplify and switch electronic signals. How does one waste computer power? Alan Kay, an engineer working at Xerox’s Palo Alto Research Centre, explained that rather than save transistors for core processing functions, he developed the Dynabook, a computer model that created software with broader appeal, attracting more users with animated eye candy. What Mead and Kay understood was that transistors would become so abundant, that they might as well be free. Even though things may never be entirely priceless, there is great advantage to be had in treating them as if they were free. From the consumer’s perspective there is a huge difference between the two, a “penny gap” between cheap and zero, that they are most certainly aware of. Computer users are probably very conscious that the Web is far from a free business, and someone’s hand is always collecting and spending cash from their pockets. If Gmail doesn’t directly charge their credit cards, Bell will.

It’s now very customary that everything computer technology contacts becomes free of charge; at least as far as consumers are concerned. Consider this association: At the dawn of nuclear power in 1954, Lewis Strauss, head of the Atomic Energy Commission, guaranteed that in the future electricity would be “too cheap to meter.” That didn’t take place, but what if he’d been accurate? Everything electricity touched would have been changed. Rather than scale electricity against other energy sources, we’d waste it because it would be too cheap to be bothered. Today it’s digital technologies that have become too cheap to meter. Free is not an option but the foreseeable destination. The amount of free!dom on the net is not necessarily as simple, safe and risk free as it appears. Everything digital technology has touched has been completely transformed, from the novels to kindles, from photo albums to the Ipad…why would anyone PAY for free information in a downloadable, and better yet, free age?(Why would anyone PAY for FREE information?) The cross-subsidy system is reversed, and after buying a technological device such as an Ipod, hundreds of dollars worth of songs can be downloaded without charge. Now that the novelty of endless resource access has completely worn of, has the information age completely lost its concept of value, as people demand more and more for less and less?

Click on the link below for a demonstrative explanation of the Free! concept by Editor in Chief of Wired, Chris Anderson! FREE! Why $0.00 is the Future of Business by Chris Anderson

Works Cited:

Chris Anderson, “Free! Why 0.00 is the future of business” in Wired ( 3/10.

Walter Benjamin, “The Work of Art in the Age of Mechanical Reproduction,” in Illuminations (New York: Schocken Books, 1968), pp.217-251. 3/10.


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