The business of free

Many of the most popular websites in the world offer a free service, yet are hugely profitable. Free search from Google; free messaging with MXit; free news from Mail & Guardian Online, even free photocopies!

Most people who use them haven’t even considered how these ventures might make money. In fact, if you consider the cost of developing and hosting those services, it might seem altogether altruistic.

Of course, giving something away for free might seem to make no sense if we look at it through the lens of the traditional market economist — high demand for scarce resources should drive cost of use higher in a free market. But things are different in the hyper-connected world in which we’re living. The internet is a world where the product of scarce resources such as time and labour can be scaled to the extent that its cost is so thinly distributed among its users that it becomes free. This is the new market panacea — a perceived escape from the bounds of scarcity.

Unfortunately, we cannot escape fundamental laws of physics — energy cannot be destroyed, it can only change form — and scarcity in a market can’t be eliminated, only transferred. So not only might this new ideal of “free” be flawed, but there is possibly a hidden personal cost to buying into it.

With the huge amounts of “free” information that we’re all being bombarded with on a daily basis, we are collectively experiencing a major attention deficit. This is why businesses are spending more and more money on every form of advertising, and branding every imaginable surface — they have realised that in a world where the products and services are all good enough, the one that wins is the one that has the highest share of our attention.

Going forward, we will see more and more things becoming “free” — phone calls, taxi rides, you name it — but there will be another type of cost involved. There are battles brewing for shares of our attention. If we don’t start to budget our focus, and treat attention spammers as we would thieves, then we might find ourselves saddled with information overload as crippling as a mountain of debt.