The Price of Free

One of the peculiar things about the software industry, and by extension the digital economy, is that the cost of manufacturing stuff is effectively zero. Once you've created one copy of a software application, MP3 file, online news story, or video, the cost of creating a million duplicates is close to nothing. This isn't true of any other industry I know, with the possible exception of financial services, where the commodity (but not the service itself) is also virtual.

This peculiarity can have strange consequences. Take the open source software model: the premise here is that an army of dedicated individuals can pool resources to create a piece of software they can all use and maintain with no license costs. The model presupposes large numbers and common interests, so works best on ubiquitous or commodity applications – web browsers, word processors, operating systems. (I'm writing this using OpenOffice running on Linux and the experience is faster, better and definitely cheaper than Word on Windows.) Stating the obvious, there's never going to be an open source car, or loaf of bread, or pair of socks; we could readily design one, possibly agree that it fits the needs of a very large number of users, but you'd then have to manufacture and ship it, so what's the point?

Open source works for another reason – producers are are also consumers. People that contribute to open source almost always have some self-interest as users of what they create. In fact, most contributions to major open source projects such as the Linux operating system are employed by companies that use it heavily or are engaged in offering it as a product with paid-for support services. This is communism as the dictionary originally defined it, put to the service of capitalism.

Over the last few years we've seen more and more of our lives get translated from our analog reality to the digital otherworld. In the process, there's been a huge shift in how we consume news and entertainment, and the peculiarity of 'no manufacturing costs' has come into play. Trouble is, most people conflate this with “free.”


At the heart of this debate is an argument often reduced to the aphorism “information wants to be free.” In the political sense we might all agree with this, but in the dollars-and-cents sense it's hard to see how this would work. In the dollars-and-cents sense, most useful information has a real cost. When a composer writes a tune, or a journalist a breaking news story, there's often considerable resources involved. It takes work, and inspiration, and training. Yet in much of the digital world today, the presupposition is that everything can and should be free. In a recent BBC interview the director Steven Soderbergh argued that this was an attack on the notion of the professional, something echoed by Nick Carr. In my view, free only makes sense when you have a model close to that of open source software – where consumers are also providers, which liberates information from having real ownership. Otherwise, you gotta pay if you want anything of real value.