Burcu Arikan

Chris Anderson, the editor of Wired magazine, plans to crystallize the implications of doing business when the cost of products, services and storage is falling rapidly toward zero.

He said to Advertising Age that there are 3 kinds of free. In the first one, the product is free because it’s subsidized by the advertiser. That’s called a three-party market — the publisher, the advertiser and the consumer who gets everything for free.

In the second kind of free, the price gets closer and closer to zero, you can eventually just treat it as free. For instance Gmail’s one gigabyte mail account for free and Yahoo’s infinite storage.

The third one is the gift economy. This is the basis for Wikipedia, the blogosphere, Craigslist. All the social incentives that are turning out to be incredibly effective in getting people to do things for free.

Now, Wired is charging $10 a year for a subscription. This fee is a nominal fee simply as a psychological fee that shows that readers want it — which allows us to charge advertisers more. A single penny does it. They charge $10 because they don’t want to devalue the product, because that would be sending the wrong message.So, Wired is almost free to, less than $1 per month.

This is the new economy that companies like Wired, Craigslist, Ebay and Netflix ushered. Product types are changing, consumers are changing and the economy, too.