The Free Economy is a Pipe Dream

Singapore, 21 July, 2009. By ‘free economy’ we are not talking about an economic system or even Friedman’s admiration for economic freedom. We are talking about gratis, on the house, free of charge.

“TINSTAAFL” I hear you say, your grandfather taught you that, trying to ensure you never forget, “There Ain’t No Such Thing As A Free Lunch”. Your grandfather was right. Keep reading.[br]

Singapore, 21 July, 2009. By ‘free economy’ we are not talking about an economic system or even Friedman’s admiration for economic freedom. We are talking about gratis, on the house, free of charge.

“TINSTAAFL” I hear you say, your grandfather taught you that, trying to ensure you never forget, “There Ain’t No Such Thing As A Free Lunch”. Your grandfather was right. Keep reading.[br]

But some things are free aren’t they? What about the web? We can find anything we want online, from sites like Wikipedia, YouTube, Google and elsewhere. This is the information age!

We may pay for our internet connections but the content is free. You don’t get a bill at the end of the month for how much info you consumed online do you?

Maybe you do. Many sites are ad-supported, which pay for their hosting, content, and other things that we consumers need them to pay for. You see them, they register in your brain, and you sometimes click on them.

But what about TV? Isn’t it free? Just turn it on, tune your coat hanger antenna, and watch. But it’s those annoying ads that keep it seemingly-free. And please watch them, so we can keep this business model alive.

Blogger Jason Falls refers to it as the ‘admission’ you have to pay to get it. He criticizes a friend of his who professes his love for his DVR and the fact that he never has to watch a commercial.[br]

Falls retorted, “The avoidance of those commercials means those shows will eventually be cancelled. You’re killing your own chances of being able to watch them by watching just them.”

Whether you like it or not, you are affected and probably respond to these ubiquitous commercials. Your perception of brands is shaped by them, and – heaven forbid – you might actually make purchases based on them.

In the old days of the web during the dot-com bubble, things really were free. Venture capital was free. Viable business models were far less important than what was cool.

And to some extent this climate exists today. Just look at Twitter. So far, it hasn’t started to monetize its tweets, but the scope to do so is tremendous.

But in general, all sites, companies, and businesses must generate real revenue somehow. And often, the ‘freemium’ model is employed, if not just ads.

All content, entertainment, software, web services, movies, TV shows, music, articles (including this one) cost money. The people producing them need to eat, pay rent, buy clothes, and survive. Behind all good content (except user-generated content) is a price.

Even user-generated content, like Facebook, is ad-supported, as are most blogs and forums.

So next time you think a site or program is free, think again. In all likelihood you are paying for it. Thanks for the business.

Umberto Osman, EconomyWatch.com