Free!

Wired has just published an excellent article by Chris Anderson entitled, "Free! Why $0.00 is the Future of Business." I have frequently been getting into somewhat-heated discussions with both my peers and others about the current state of media and how things like P2P and YouTube will be affecting the sale of media in the future. More often than not, I'm saying that somehow everything will end up free or at an extremely minimal cost to the user, while the others complain that without a money-based consumer-producer based relationship, there won't be anything to fund any of the media.

Well this article takes everything I've been trying to say (and more) and makes it coherent and kicks the ass of anyone who I had been arguing with before.

Thanks to Gillette, the idea that you can make money by giving something away is no longer radical. But until recently, practically everything "free" was really just the result of what economists would call a cross-subsidy: You'd get one thing free if you bought another, or you'd get a product free only if you paid for a service.

Over the past decade, however, a different sort of free has emerged. The new model is based not on cross-subsidies — the shifting of costs from one product to another — but on the fact that the cost of products themselves is falling fast. It's as if the price of steel had dropped so close to zero that King Gillette could give away both razor and blade, and make his money on something else entirely. (Shaving cream?)

Link: Free! Why $0.00 is the Future of Business on Wired.