The Price of Free

You don’t pay for a lot on the internet. The only time you’ll have to stand up and extract the wallet from your back pocket is when you want something physical to be posted to you, perhaps some Viagra.

You certainly won’t be paying for services on the web – email, search or storage – and we all know how cheap illegal downloading is. Even if you want to stay legal there are plenty of zero price options through the open source (free) software movement.

Musicians may be going hungry and the software industry reeling, but I’m concerned about what it means for me.

The price of sending an email is the reason that the global inbox is wedged full of spam. If an email cost even as much as a glass of water from the tap in your kitchen spam would cease to be viable, but because it costs close to nothing to send a million emails to find one potential penis extender spammers are able to do exactly that. I might add as a corollary an invitation to a thought experiment – how much less time would you spend writing and reading pointless emails if you had to spend a bit of money on each? If Benjamin Franklin’s time-money equivalence holds then might free email not be a false economy?

Email might be the most notorious abuse of zero cost communication, but there are plenty of others. Technorati (the blog search engine) indexes 112 million blogs, that’s one for every four English speakers. I’m not convinced that every one of the 1.6 million posts that it records every day is a valuable addition to the body of human knowledge. And Twitter – how can I say this more eloquently than its name does? – is hardly going to be running the Library of Alexandria close in terms of accrued intellectual achievement.

Copying content already available, writing for the sake of it and pointlessly echoing the opinion of others aren’t unfamiliar criticisms of the blogosphere. But even that content is a step above the one-off “welcome to my blog” posts which are probably the beginning and the end of thousands of blogs a day. All because starting a blog requires no monetary commitment.

There is a cost to hosting a webpage – it’s pretty low though, and this is another issue on the internet. When you are looking for information on the web how can you tell if a web page is genuine, legitimate and trustworthy or if it is maintained by a poorly-informed crackpot? If it’s an eCommerce site, how can you tell if it’s the real deal or a phishing skam run from a bedroom in Cambodia? It’s hard, because copying even the most elaborate webpage costs basically nothing.

Banks used to have impressive buildings to convince customers that they were there to stay and a safe vessel for your money. The tiny cost of building a webpage means that no such signalling is possible. This clearly makes the web an even more treacherous place for veracity.

Of course the idea of regulating the internet is as impractical is as it is repellent; I’d argue it’s least interesting to consider that having to pay for something has an upside.

Internet VCs, the Klondike prospectors of our day, have even coined a name for this phenomena. “The Penny Gap” – the massive increase in demand that occurs when something goes from costing even a single penny to free.

There is a simple reason for this. No matter how fantastic your product, most people don’t want it and they won’t pay anything for it. There’s no product that even comes close to be in demand by half the worlds population. However, if the product is free then a good many of people who don’t want this product will take it. Why? Because they can or because they’ve made a mistake, because it’s the quickest way to find out what the product actually is, or because other people have mentioned it. These are all types of people who have no demand for the product, and no want to satisfy.

Of course it’s not that simple, and advertising revenue throws something of a spanner in this analysis; none the less, the essential signalling mechanism of our society’s desires – price – has been neutered on the web.

“Spit” is the newest kind of unsolicited contact – Spam phone calls over VOIP (Skype and the like). It’s very hard to combat because, unlike email, there is not very much time to analyse whether an incoming call is “spit”, and being audio it’s much harder to filter. No doubt as the internet becomes more pervasive so will unsolicited contact.

It strikes me as a bizarre inversion of the problems of the command economy: on the internet we all have to wade through piles of spam just to get what we want, exactly as Russians queuing to bread (okay, I’d rather have spam than an empty stomach…). In Russia demand and supply didn’t equalise because the government would not allow prices to rise, on the internet we refuse to let prices rise because of our mindset — which is made possible because providing, for example, an email service costs very little. Instead of an inefficient allocation of limited bread, we end up with an inefficient allocation of limitless email.

What should be done? I think I’d probably be happier paying a tiny amount for my online services, just to make all the pointless chatter to go away, much less obvious is how such a system could be enforced, and I’m the last person to advocate regulating the internet…

Jimmy Tidey (Follow me on Twitter)

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