The Economics of Free

One of the central themes of this blog is that Internet has changed many things by allowing the distribution of digital objects for virtually no cost. This has enormous knock-on consequences: the software industry is where that is most evident, but content is being hugely affected too.

I tend to write analogically, drawing on my knowledge of free software (which goes back about 13 years now) to try to understand what is happening - and will happen - in other fields. An alternative approach is to look at this from the viewpoint of economic theory.

This is something that I am hugely unqualified to do, but fortunately Techdirt's Mike Marsnick has being doing an excellent job in this respect with a series of posts examining the economics of goods when scarcity is removed. He has now posted a summary to this series, together with consolidated links to the previous posts.

It's well worth reading, as are the comments on the above post - if only to see a fine display of people's misunderstanding of what's going on here. I was also pleased to see that the main example he uses - that of the recording industry, and how it can give away music and still make money from things like concerts, merchanise etc. - is precisely the one that I have been pointing to.

I hope that Mike turns all this into a book one day, since I, for one, would welcome and even more in-depth analysis of this important and fascinating area.