Chris Anderson, author of The Long Tail, coined the phrase “freeconomics” back in 2006 as a pun on the surprise bestseller book Freakonomics. Both words are actually a double entendres (and homonyms, for you English majors out there)

His more recent article Free! Why $0.00 Is the Future of Business expands on the idea. Of course, you can read the article for free on the Wired.com website.

From day one of the Internet, people have been expecting information to be free.  Even before the Internet, Anderson quotes Stewart Brand (author of the 1970’s best selling Whole Earth Catalog and founder of The Well online community) from 1984: “Information wants to be free. Information also wants to be expensive … That tension will not go away.”

That tension can be a strong motivator when the information is perceived to be of high value and yet offered for free. The article offers a taxonomy of free business models and product offerings enabled by the Internet:

• “Freemium” - Free software, services and/or content for: users of the basic version. Some users pay a subscription for a premium or “pro” version
• Advertising – Free content and services. Advertisers pay to get your attention.
• Cross-subsidies - any product that entices you to pay for something else later.
• Zero marginal cost - free things that can be distributed at zero or negligible cost.
• Labor exchange – free content and services because the act of using these sites and services actually creates something of value.
• Gift economy - open source software or user-generated content.

Some of these have become known as Web 2.0 business models, especially Labor Exchange where connecting with friends in your network or participating in social bookmarking can lead to profit using some combination of these models.

Are using one of these free business models to offer your product or service?

I am sorry to disappoint you if you thought this posting was going to announce that all offshore software development is now free. Not yet.

However, Accelerance will announce some new services in the very near future.  Stay tuned!

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