The Freeconomy and Why It Sucks

TinyURL: http://tinyurl.com/b9pp2s

I was reading an article from the Wall Street Journal just now, The Economics of Giving It Away, and I had an epiphany of sorts. I think I figured out why the Freeconomy sucks.

First, let me describe what I mean by the Freeconomy. Google is part of the freeconomy. Facebook is part of the freeconomy. The United States government is even part of the freeconomy now. The freeconomy is an economy built on the idea of giving away everything for free, and having a small minority pay the costs of that. Google gives away dozens of services for free, but gets paid not by the consumers of those services, but rather by advertisers. Facebook similarly gives away its services to the general public, but advertisers pay the bills. As for the government, nearly half of all Americans do not pay income taxes, but receive services paid for primarily by the top 5% of income earners.

The truth is, though, that the freeconomy sucks. As an (very geeky) example, recently I've tried to develop applications on both the Google and Facebook platforms. When I ran into trouble, real support was lacking from both companies. Documentation sucked, and if I really had to have the problems solved, I could ask other developers who might or might not know, and who might or might not even get back to me.

The Linux community is one of the oldest adherents to this model, and it shows. Switching to Linux, while generally pleasant on the technical side, is often a terrible experience when trying to integrate with the community. The Linux community feels that they make their system for themselves, and therefore anyone from the outside who wants anything different is dismissed, often harshly. The new people don't pay the bills because Linux is free, so they don't get the customer service they're accustomed to from other companies. Because the insular community pays the bills (in various ways, such as with code contributions), they give each other the attention, often to the exclusion of anyone else. Since new users don't pay, the Linux user base has remained fairly small for a very long time.

The problem is that, for most of the Freeconomy, the customers no longer are the ones paying the bills. They consume gratis resources and return nothing. The customers have become expenses rather than revenue. Technically speaking, the consumers are not really the customers if they are not generating revenue. The true customers are the advertising companies who pay the bills. What does this mean for the consumers of these products, though? Well, the customer is number 1, and that's not you. When it comes to making someone happy, your interests are pretty low on the totem pole. The companies who are most prevalent in our lives anymore aren't even interested in truly giving us a better product. They're more interested in providing a better ad platform. It is no wonder that the average consumer goes by the wayside for these entities.

This is why the government and large corporations are working hard to get us spending money again to "save the economy." They're even willing to give us free money with which to do it. Why would they do such a thing? Because the people with which we would spend that money are the people who pay the bills. It doesn't matter that continuing to push spending over savings is bad for most individuals. What matters is getting people to buy the cars and TVs and everything else that pays the bills.

Not all community-oriented organizations in the Freeconomy suck. Wikipedia, for example, is an exception, mostly due to its vast and diverse user base. Because they must be so much to so many, they've avoided the insular nature of Linux. Because they are funded solely by that large user base, they focus on building a better product for them. The consumers are paying the bills, and that makes them true customers.

The unique aspect of business used to be that the people who got the products and services were the ones who paid the bills. Charities, governments, and most other types of organizations had to deal with a separation of these two interests (which may be one reason why they are not always good at what they do), but business only had to focus on one place, which meant the customer always was the target for better service and better products. Well, now we've blown that model out of the water, and I think we're just starting to see how that's going to work out. While I am not a fan of some of the products I must purchase (*cough*Comcast*cough*), at the end of the day, I know that they're accountable to me because I pay the bills, and maybe that's better than free.