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Free Doesn't Work for Every Company

Hank Williams of Why Does Everything Suck? does an informal economic critique of Chris Anderson’s “things tend to free” hypothesis:

“Some of you will argue that Google does fine based purely on advertising. But just because one company can commoditize everyone else’s work and make pennies on things that used to generate dollars, is that sustainable across the whole economy? Or would we really be reducing the overall amount of money flowing into the digital market and therefore to the overall labor force?”

Williams continues …

“I do believe we are in an era of artificial digital abundance in large part driven by over zealous VCs and companies like Google that are supporting money losing services with their massively profitable search engine. But this cannot continue indefinitely. Google cannot do the best job of making every category of everything. Scarcity of important useful products will indeed return. These products will be designed by companies that do not want to lose money and don’t have a search engine to subsidize money-losing efforts. Therefore they will have to be supported by direct (i.e. non-advertising) revenue streams.”

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  • http://brainjunction.blogspot.com Christian Busch

    There is another asymmetry in place:

    People that contribute are not paid for their value generation, but the platform provider is.
    In this case its blogspot.com – Google.

    You only need 1% of the visitors to contribute to create a community. That community is making money in the 6 ways mentioned in Wired, but we are not paid for doing the work and creating the value, anywhere today.
    Amazon, facebook, wikipedia, you name it.

    I believe this will be the next paradigm shift in the networked world although it remains to be seen if people ever realize they are exploited…