

Chris Anderson: Free! Why $0.00 Is the Future of Business - toffer
http://www.wired.com/techbiz/it/magazine/16-03/ff_free

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mercurio
Have the laws of economics really changed? Almost everything free on the
internet is cross-subsidized by advertising. Since television has being doing
this for about 50 years, I don't see how this is the "future of business".
More like an effective business method has gained much wider applicability.

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yters
If it hasn't happened yet, something like this has to happen soon.

Money isn't really wealth, money is just a representation of wealth. At some
point, the overhead of using money will not be worthwhile.

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mercurio
So how would you spend this hypothetical wealth? The abstract concept of money
is what allows the development of a highly specialized economy. Greater
specialization leads to greater productivity, and hence increased wealth.

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yters
Spending is a misnomer. If the things you would spend your money on are part
of the very system of wealth you contribute to, then you don't need money.
This is what we're seeing with the web.

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mercurio
I don't understand your point. Are you talking about some sort of digital
bartering system? And what exactly is the "overhead" of using money (I hope
you aren't referring to the fact that it has to be earned)?

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yters
No, the overhead is in the charging and tracking of money. If your system is
dynamic and fine grained enough, then it can cost just as much to maintain the
financial representation of what is happening as the event itself. Thus, you
don't really make anything.

A very hypothetical example: say you have millions of simultaneous users all
over the world who are constantly, but unpredictably, using your web service.
The value of all these people using your service together is very high.
However, since people use the service irregularly, charging them a significant
amount would make it not worthwhile for them to use your system, and you lose
your crowd. On the other hand, the amount that you could reasonably charge
them is so small that it would only cover the cost of transaction, and would
make the psychological overhead great enough that you would again lose your
crowd. So, overall, it is best to not charge anything, and instead extract
value in other ways, such as demographic information mining.

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TheTarquin
An excellent article. "Invest in needed disposables" is always good advice and
seems, to me, to be the real point of the article.

Another, more morbid analog to the Gilette example, is why it's always good to
invest in lead and copper when the country goes to war. FMJ ammunition
suddenly becomes a much-needed and much expended commodity and the raw
materials prices sky rocket.

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ivankirigin
At the OReilly Tools of Change publishing conference I just went to, Tim
OReilly gave a great talk on "Free is more complicated than you think". The
old school publishers that don't use the web nearly as well as OReilly are
shaking in the boots because of things like Wikipedia.

They just don't get it.

Chris is 100% right here.

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neilk
I once thought I would have a career in media, but I switched to software in
part because I realized that my customer was going to be corporations, and the
product was audience attention. It saddens me that ads are invading the
software world too.

Advertisements are not a neutral way to make money. That model rewards massive
infrastructure investment, control of information distribution, and overall
low quality of the actual product.

It's very strange that one of Facebook's big problems is that their content is
too interesting and meaningful to their users.

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aston
It's not true that you need bad content for advertising to work. You just need
advertising that's better than the content. I watch Superbowl ads willingly,
and I read basically every ad in WIRED that doesn't look crappily designed.

That said, it's hard to make content more important than my friends...

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optimal
The money always comes from somewhere, even it's now twice- or thrice-removed.

Follow the money.

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brlewis
<http://www.paulgraham.com/webstartups.html>

"There's something interesting happening right now. Startups are undergoing
the same transformation that technology does when it becomes cheaper."

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konsl
I love "freemium" business models, but only when the negative externalities
aren't seen by the "users of the basic version" and especially when the
positive externalities _are_ seen by the "users of the basic version".

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joseakle
"we now have a handy way to convert from reputation (PageRank) to attention
(traffic) to money (ads)"

... on the attention economy (previously on hn)

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systems
google sell advertisement, not email accounts google sell advertisement, not
end user applications google sell advertisement and to do so they attrack the
audience by offering free things ... the idea itself it very simple, the
brilliant thing is, google kept the audience hooked

google's ecommerce model is a by the book case, offer free content and
services and sell ads

moral is, google didnt start by, we will offer this for free and they will
come, they must have started by we wonna sell ads on the web, how can we make
ppl come

if they do it any other way they will eventually vanish

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randomhack
well .. actually the opposite. google didnt start with the concept of ads at
all. they started out by offering free search. ads were nowhere in their
initial plans. it was later they discovered that ads actually helped them make
money.

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systems
in that case, they didnt have a business model, they just got lucky!

if this is what you want to believe, fine, but there are those fields called
strategic management, marketing and economics, where people study and discuss
how you can make a real plan to make real money, and believe it or not it
works, and many many companies survived thanks to those reasearches from those
fields, and many many companies failed for ignoring those exact things

and in business just like in development, implementing is way harder than
knowing, so just because you know whats right, doesnt mean you can do whats
right

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rrival
Anyone want to buy some old dot-com business models?

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ivankirigin
I'm working on a micropayments engine you could use to sell em.

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rrival
I think the joy would be in selling failed freebie business models =) ~still
misses Kozmo.com~

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initself
Highly recommended read.

