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January 04, 2008

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Sam Pablo Kuper

Valid concerns; it's good to see you raising them. Let's hope Chris's book does indeed address them.

JX

I'm not sure what you mean when you say Google isn't making money on GMail. Every time I open an email there, very good, targeted ads are presented to me. I even click one of them from time to time. I guess there's some money to be earned there for Google.

Paul Soldera

But Chris Anderson's point isn't that these things are COMPLETELY free to the end user, it's just that their cost is so low, they can be treated as free. Very fine, but important point. So yes, it costs me something to read Wikipedia in terms of electricity used, but the amount is so minuscule and the cost so small, it may as well be free. Same with Gmail from Google's perspective as storage costs are so low.

I like his argument, but it is 'obvious' to some extent. Definitely interested to see where he takes it.

Matthew Hurst

JX - thanks for the comment. When I said 'making money' I guess I was really meaning, making a significant profit. The presence of ads indicates more that they are trying to make something out of it. You see plenty of ads on blogs with low readership - we can't conclude that each of these bloggers is 'making money'.

Matthew Hurst

Paul

I'm afraid to say that the 'so cheap we can call it free' attitude is very worrying. Think of this: using a gas powered lawn mower uses a tiny piece of fuel each time it can hardly have an impact on the environment, right? Now - how about a million lawn mowers? In addition, there is a difference between what it costs you in terms of you wallet and what the true cost is.

Paul Soldera

Matthew, right I agree. The consequences of a small cost (monetary or environmentally) can have huge aggregate effects. But that's not really and argument Anderson is making - or debating (I am sure he would agree). He's just looking at it from a producer's perspective - when marginal cost falls to or tends to zero, you're better off - in an economic sense - treating the good as free to the consumer and finding other ways to generate revenue from the 'transaction' - Google ads in Gmail, concert tickets for bands, etc., etc.

Externalities are a society's concern, not a producer. Taxes and incentives that change the marginal cost of the good (like fuel taxes) can tackle these to some extent. Yeah I know, this doesn't always work. But then there are plenty of 'FREE' markets that have no negative externalities either. But I do get your point.

Dmitry

RE: GMail is not winning in web mail

Actually, I disagree with that. There's winning in terms of marketshare and there's winning on technical merit. As far as technical merit is concerned (and as an engineer I care about this very much), hats off to Google, they showed everyone how it should have been done to begin with and they continue doing so. They're the only free provider that doesn't barrage you with blinking ads and offers secure POP, IMAP and SMTP for free. And their UI doesn't suck.

Marios Perdiou

RE: GMail is not winning in web mail

I also disagree with that, gmail has so many features like the best search, googledocs, download all attachments, view all images, using keys to navigate the interface, ..they are just the acme of innovation in web mail.

But, how really free is wikipedia .. is hardcore economics!

Brandon Thomas

Interesting post. Anderson missed a few fundamentals in The Long Tail as well, specifically with his Wikipedia / Britannica example (see my post on this from a few years ago at http://www.gbrandonthomas.com/2007/03/long-tail.html ). His ideas are fascinating, but he definitely needs to enhance is understanding of economic fundamentals...

George Scott

Sure there are associated costs with anything. But is it free of cost to you... Would the electricity be on to your computer anyway? So where is the cost to you that you are not already paying?

I have a service officezilla.com that I give away for "free" but it is not free in the sense that you have to move your fingers and mouse which burns calories therefore you must eat so it is not free because I do not come to your house and feed you to give you the energy to use it.

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