Chapter 01 / Summary
1. The economics of free: When marginal costs approach zero
As a result, the net annual deflation rate of the online world is nearly 50 percent, which is to say that whatever it costs YouTube to stream a video today will cost half as much in a year.
The digital revolutionhas dramatically reduced the marginal costs of producing and distributing information goods. This phenomenon is driven by three key technological trends:
These trends combine to create a "triple play" of technological advancement, making digital goods increasingly cheap to produce and distribute. As a result, many digital products and services can be offered for free, with companies finding alternative ways to monetize their offerings.
Examples of free digital goods:
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