
Why so many things cost exactly zero - yarapavan
https://www.bloomberg.com/news/articles/2020-01-12/sunday-strategist-why-so-many-things-cost-exactly-zero
======
hannob
There's a very simple reason for this: Payment is complicated and adds
overhead. Particularly payment that works for everyone internationally.

Every form of payment, no matter in which direction, needs to provide enough
benefit to justify the costs of the complexity added by it.

~~~
tialaramex
This is why Let's Encrypt is zero cost by the way. I'm certain Hanno knows
that, but for everybody else:

The purpose of ISRG (the not-for-profit which runs Let's Encrypt) is to drive
automated issuance for Web PKI certificates. Nothing about this directly means
they should be free - surely a not-for-profit could deliver this as an at-cost
service, so why zero cost when that's not a core goal?

Machines don't have wallets. If they charge even 1¢ for a Let's Encrypt
certificate (which would certainly cover costs at current issuance rates) now
there needs to be a payment flow, which the machine needs help with because it
doesn't have money. At zero cost all of that goes away and leaves you only
solving engineering problems to achieve your goal of automated issuance.

~~~
tlb
I wish there were a way of sending $0.01, by sending $10 with probability
0.001. That is, you and I negotiate a random seed (using something like
Diffie-Hellman) and then we can generate probabilistic microtransactions and
only transfer the $10 in the p=0.001 case.

EDIT: fixed arithmetic, thanks skj

~~~
nwienert
This is smart! Why not build it?

~~~
paulddraper
I suspect the probabilistic aspect would not actually be popular.

~~~
tlb
Yes, I think people would hate it for the same reason they love gambling slot
machines. People overweight rare and random events. You'd always remember the
one time you got dinged $10 for looking at some lame clickbait article.

~~~
nwienert
You wouldn’t need to sell it as random to the end user.

~~~
paulddraper
That's a good point.

------
dehrmann
There's this awkward gap in online service pricing that I hate. I'd like to
pay $3 per month for a 100GB Dropbox quota, but Dropbox decided (rationally--I
don't blame them) than anyone paying less than $10 per month isn't worth their
time.

Pretty much all ~consumer services like that are either free or at least $10.

~~~
zdragnar
Sadly, a flat per-transaction fee of 30 cents or so associated with credit
card payment processing means that fees alone eat up over 10% of a $3 plan.

Until payment processing is an inherent feature of the monetary system, rather
than through multiple third parties, small transactions like these are just
bad for everyone.

~~~
Finnucane
If you are old like me you remember when stores had minimum purchase limits
for credit cards, and some places (esp. gas stations) would charge different
prices for cash or credit. The credit card issuers have strongarmed the
retailers to curb those practices, so the only rational response for a service
that would be entirely dependent on them would be to have a minimum for
everything.

~~~
antod
In NZ, those minimums and surcharges are coming back and relatively common.
Retailers are getting vocal about the "evils" of credit cards companies too.

~~~
bacon_waffle
And many places simply don't accept credit card payments.

I find it interesting, because EFTPOS (like a debit card in the US) seems to
be far-and-away the most popular way to pay for small items and is accepted
virtually everywhere.

------
m11a
> It’s obvious why the likes of Facebook and Google don't charge for their
> products: It costs nearly nothing to transmit, say, one Gmail or host, say,
> one photo on Instagram.

This already doesn't make sense. This wrong logic could be extended to every
paid service which doesn't rely on an external service, especially SaaS, on
the internet. If this reasoning was correct, everything from Zendesk to
Superhuman to GitHub (pre-Microsoft pricing) should be free. Development costs
money, and hosting overall costs a fair bit of money (because every user
doesn't just post one picture, or have one email, and it compounds).

The real reason it is free is because they want users, and make more money
from ads than they would charging a reasonable price (which would massively
cut adoption anyway).

~~~
sidlls
Yes, I stopped reading at that point. What does the author think the small
army of software engineers and researchers that create their products are
paid? Nothing?

------
SwellJoe
I've gotten to the point where I automatically and instantly discount any
theory that proposes blockchain as a solution. I'm not saying blockchain
technology will never be a good solution to a real world problem, but I have
noticed that it is very often an ignorant assertion of faith rather than an
argument based in fact. It walks like a religion and quacks like a religion,
so I'm not sure why I should think it's something other than a religion.

~~~
m11a
> It walks like a religion and quacks like a religion, so I'm not sure why I
> should think it's something other than a religion.

This is such a good way to describe the current state of blockchain.

It's a cult. And mostly spread around by people who are trying to increase the
price so they can sell and profit off other people. It's a giant ponzi scheme,
and wealth redistribution.

But I think the technology has promise. We just haven't bothered explore real
applications of it, because we're too busy trying to use it to make a quick
buck at someone else's expense.

------
gumby
There's a lot of evidence that the bigger factor is transaction cost. People
consume more under all-you-can-eat plans than per-transaction plans (e.g.
internet service) even though the unmetered plans may cost more, simply
because they don't want the mental overhead. People will drive out of their
way to avoid a tool bridge even if the toll costs less than the cost of
operating their vehicle for the other route.

All that billing infrastructure costs money as well. Think of how much of the
phone and TV cable networks is consumed by nothing but managing tollbooths?

The post from Stratechery yesterday made this point differently: when credit
cards were introduced _merchants_ liked them because they no longer needed the
(pre-computerized in those days) infrastructure and headcount of billing
customers, checking credit, etc.

~~~
inetknght
> _People will drive out of their way to avoid a tool bridge even if the toll
> costs less than the cost of operating their vehicle for the other route._

It's not just the mental overhead here. I specifically avoid toll roads
because I think their concept is fundamentally wrong. I pay taxes to pay for
roads and their maintenance. I shouldn't have to pay more taxes ("tolls") to
pay to use those roads.

If it's a private road then it should be marked as such. The public shouldn't
be permitted to drive on private roads marked as if they're a interstate or
state highway or anything like that. It's deceptive and profiteering off of
what the government already provides: transportation infrastructure. And it
absolutely should not be permitted for a private entity to purchase an
existing road and turn it into a tollway.

~~~
criddell
Would you be opposed to making all roads toll roads and no longer pay for them
with outside taxes?

~~~
inetknght
Yes. Roads and infrastructure should belong to the people.

~~~
criddell
They could still belong to the people. It's just that they are paid for by the
people who use them. The more you drive, the more you pay. To a small extent
the gasoline tax works like this.

~~~
inetknght
Poor people cannot afford this. It's the whole reason that taxes were set up
for road and infrastructure maintenance: so that _everyone_ can benefit
instead of just the wealthy.

------
jariel
Payment friction.

Anything +/\- 0 by a little bit will be zero because there's huge friction
costs in transferring money:

\+ UI complexity, sign up \+ Transaction costs (VISA, fraud protection) \+
Financial accounting \+ Hosting the relevant financial data \+ Legal issues

~~~
ghaff
And, arguably, mental transaction costs. Getting people to pay anything at all
is a big hurdle to get over whether it's a penny, a dollar, or ten dollars.
Clay Shirky wrote way back when that this was the main problem with
micropayments and I'm mostly inclined to agree. (It's true that $1 digital
music and video rentals for a few dollars were/are something of a thing. But
people seem to generally prefer all you can eat subscriptions.)

If people were really on board with micropayments, I suspect they could be
made to work technically/financially.

~~~
jariel
Yes, definitely.

'Paying money' is not like the old days when you'd flip literally a few cents
out of your pocket for some candy.

Money transfer in tech comes with huge headaches across the board.

Privacy, compliance, international taxation, VAT, risk, etc. etc..

------
fxj
> Broadcast television and radio.

At least not in Germany. Every household has to pay a monthly fee even if they
dont want to. No opt outs possible.

And for music licenses there is GEMA which is also financed by additional
charges on empty media like SDcards or Hard disks. Also no opt out possible.
Google/youtube was fighting it and they finally lost the battle.

So in principle the IP Providers could be forced to pay a monthly fee for
internet searches and social media. For mobile networks this is already
discussed.

It seems that the EU doesnt like the free services from the SV giants and will
fight them in the time to come. The GDPR was only the beginning. The next one
will be more about the money.

~~~
lm28469
> Every household has to pay a monthly fee even if they dont want to

Even if you don't own any screen or audio devices they still make you pay for
it. I always fail to see how this isn't pure theft.

~~~
gioele
> > Every household has to pay a monthly fee even if they dont want to

> Even if you don't own any screen or audio devices they still make you pay
> for it. I always fail to see how this isn't pure theft.

The rationales is that you are benefiting from that service (public
information) indirectly (other citizens make more informed decisions) even
though you don't use it directly.

And, realistically, which household does not own a device that is able to
receive a video via a web site?

BTW, you don't need to pay the Rundfunkbeitrag if, among others:

«* you receive BAföG and do not live with your parents, * for recipients of
unemployment benefit II or social allowance benefits, * for recipients of
social welfare benefits or basic subsistence benefits ("Grundsicherung"), *
for recipients of assistance to blind people according to § 72 German Code of
Social Law XII.»

Source: [https://www.studentenwerk-hannover.de/en/en-social/en-
reduct...](https://www.studentenwerk-hannover.de/en/en-social/en-
reductions/en-broadcast/)

That said, it is high time that these kind of levies get converted into normal
taxes and progressively taxed like everything else. Why should the €30k/year
household contribute as much to the public information as the €200k/year
household?

~~~
lm28469
If it's mandatory then make it a tax, like every other thing. This is kind of
in limbo between tax and "you're not really obligated to pay, it's not illegal
not to pay, but if you don't pay the state allow it to be processed by debt
collectors".

It's like if you received a letter asking you 10 euros a month for building
schools, another 15 euros for building new public buses, another 15 for a new
train line. All these things are taken from your salary before it even reaches
your bank account so why is this tv/radio thing any other way? We're already
paying insane amount of tax in gerrmany, asking for 17 euros per months for
thing like this on the side is an insult.

~~~
thebean11
If all taxes were itemized like that it would probably lead to a lot more
government accountability of how money is spent, and it would be a forcing
function to create a budget ahead of time.

I'm sure there's a million issues I haven't thought of, but I like the idea.

------
chrismmay
I've been paid a total of 35 BAT (~$8) for using the Brave browser since
October '19\. STEEM was supposed to be like Facebook, but you get paid. It
turned out to be more of a "rich get richer" ecosystem, so I stopped using it.
Facebook's Libra may yet turn out to be a way for people to get paid for using
Facebook. I stopped using Facebook entirely following all the negative press.
I only recently signed in to strengthen my password and enable 2FA. I don't
use it anymore at all. Maybe I would start again if they paid me.

------
alecbenzer
I've never heard an email sent via Gmail referred to as a "Gmail" before.

~~~
zamadatix
It's a common thing to happen and I've noticed it a lot with middle age non
tech crowds. It's not a new phenomenon overall but people talk about how their
son made a YouTube or they sent a Gmail quite regularly. For some reason tech
folks find it natural to use the verbs (e.g. I googled/youtubed it) but not
the nouns.

It doesn't always require the service have 100% market dominance either, just
that it be popular enough people hear others use it and commonly used in
exclusivity by the user.

~~~
TylerE
This must be a local thing. I've never heard "gmail" used as a verb, ever, by
any one of any age.

~~~
zamadatix
It's not really a local speech pattern thing it has more to do with
associating <product name> with <name of tool>. If you can think of examples
for a dozen other traditional products (kleenex, ketchup, jello, aspirin..) it
shouldn't be hard to imagine that people do it for gmail and technology
products/services. It's also certainly not unheard of though it is still less
popular than traditional "emailed"
[https://trends.google.com/trends/explore?date=all&geo=US&q=h...](https://trends.google.com/trends/explore?date=all&geo=US&q=how%20to%20send%20a%20gmail,how%20to%20send%20a%20email)

~~~
TylerE
That's a different part of speech.

No one says they're going to "Kleenex their nose" or "aspirin their headache"
so why would they "gmail their friend"?

~~~
zamadatix
For the same reason they "email my friend" but don't "tissue my nose" or "drug
their head". If it doesn't sound right to start with it won't sound right
after you swap the generic term for the brand name.

You've at least heard someone say "let me Google that" or "that's
photoshopped" right?

------
m463
There are a lot of reasons things cost zero.

I think one is _complements_ [1] (if the price of jelly goes down, peanut
butter sales increase)

Apps are complementary to iPhones, so if Apple drives the cost of apps to
zero, they sell more iphones.

For Google, if data sales are complementary to services, making the services
free makes data sales rise.

Only thing I've noticed though is that free is associated with lots of
unintended consequences. Free electric car charging means it's hard to
reliably charge your car. Free web services means nobody gets good customer
service. Even a modest co-pay leads to significant cost savings for insureres
because free visits can easily tie up all health-care resources.

[1] [https://www.joelonsoftware.com/2002/06/12/strategy-
letter-v/](https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/)

------
saagarjha
I think this is just the same problem of micropayments on the web: nobody’s
“solved” it, so free is just the most convenient option by far.

~~~
amelius
Not true, app stores solved it ...

~~~
choward
Don't they skim like 30% or something crazy like that off the top of every
purchase? If so, I wouldn't call it "solved".

~~~
AnIdiotOnTheNet
When you consider the infrastructure provided for hosting, payment processing,
distribution, and the storefront itself, 30% is not unreasonable.

~~~
monocasa
That 30% is on more than $60B/yr for apple. Are you suggesting that their
overhead for running app store is anywhere within even a couple orders of
magnitude of $20B/yr?

~~~
AnIdiotOnTheNet
I'm suggesting that, compared to what you'd pay to do these things for
yourself, 30% is a steal. There's a reason people are ok with paying it.

------
carapace
Apparently bus fares in San Francisco just cover the costs of collecting the
fares. When a recent Mayor attempted to just make the buses free he was told
it was impractical because they would become "rolling dumpsters".

------
Scoundreller
The MER cost of an ETF could go below zero too. Many make some extra money
from securities lending.

In theory a regular shareholder could earn this money too, but it's not
worthwhile except at scale.

But I doubt anyone other than Vanguard would do this at scale.

------
ouid
"maybe blockchain will fix it"

------
sweeneyrod
I think another reason that Google et al don't pay customers is because they
might realise how much their data is worth and get uppity.

------
gweinberg
This article's only value is as a counterexample to the assertion "there are
no stupid questions." Not charging (or paying) people at all is not the same
as charging them zero, you have to be being deliberately obtuse to pretend
that it is.

------
asperous
I think most of the microtransaction argument here is forgetting about
Swagbucks [1]. I would argue micro transactions are doable, either through
networks or payout systems that wait until you have enough for a payout.

I believe the real reason is that Google isn't exactly a commodity. People are
used to the brand, the user interface, the web url, and maybe the occasional
quality or exact flavor of the search results.

Because it's not a commodity, people don't just instantly change to whichever
site pays the most, and because of that there would have to be a large pay
difference for customers to make a switch. Users are basically willing to
"forfeight" the money they would get using Swagbucks to use Google.

[1]
[https://en.wikipedia.org/wiki/Swagbucks](https://en.wikipedia.org/wiki/Swagbucks)

------
chiefalchemist
> It’s obvious why the likes of Facebook and Google don't charge for their
> products: It costs nearly nothing to transmit...

That's not why. They don't charge because it's not lucrative to do so.
Charging - however small - would change expectations on SLA, privacy,
security, etc.

Most importantly, as everyone on HN knows, they can't charge for access to
their platform because the platform isn't the product. You and I are the
product.

Finally, Bloomberg should be more careful with their word choice. They are
prestigious enough to know that __nothing__ is free. There is always a cost(s)
involved. The transaction might not call for an exchange of financial wampum
but that does not make it free.

~~~
dieselerator
>Finally, Bloomberg should be more careful with their word choice. They are
prestigious enough to know that __nothing__ is free. There is always a cost(s)
involved. The transaction might not call for an exchange of financial wampum
but that does not make it free.

I read the article. It is a synopsis of a paper. The word "free" does not
appear in the article, and to my reading the author does not imply "free".

~~~
chiefalchemist
Cost zero? That's not free?

My point is, free or cost zero...neither exits. There is no free. There is no
zero cost. Those are myths.

There is always a cost. It might not be tangible (i.e., money) but there is
always a cost.

------
jonplackett
It’s just friction. Zero just means no payments have to take place. It’s tv e
friction that puts people off not the amount of money

------
SeekingMeaning
[http://archive.ph/JbFkn](http://archive.ph/JbFkn)

------
c-smile
Just in case, I've answered similar question "Why are C++ libraries mostly
paid such as QT, Poco, and Sciter?" on Quora:
[https://qr.ae/TS4BUI](https://qr.ae/TS4BUI)

~~~
Macha
I've seen more of this - people linking semi-relevant question/answers on
quora. Even with similar wording. I'm not sure why? Is there a rise of people
using quora as a sort of blogging platform? Incentives to get views on your
answers for users?

Maybe I'm just overly sensitive as Quora initially got on my bad side when
they used to put everything behind a login wall and required accounts with
real names.

------
Igelau
I got paywalled. Guess I'll never know!

