Tobold's Blog
Tuesday, September 19, 2023
The end of “free”?

I was watching a video about a company called FreeWater. They hand out free bottles of water, financed by advertising printed on the bottles. The limits of that business model are easy to understand: If you went up to them and asked for 1,000 bottles of free water, they would refuse. Their business model doesn’t scale, a bottle of water isn’t actually “free”. A lot of the things we are used to get for free aren’t actually free. Their cost might be small, but it all adds up for large numbers. And my observation this year is that there have been several cases in which previously “free” stuff stopped being free, usually to a huge outcry.

The biggest examples were X/Twitter and Reddit making API access not free anymore. In the context of the rise of large language model AI, giving all your content away for free in a format easily readable by a computer wasn’t a good idea. And handling millions of API requests isn’t free. With the currently still unresolved Unity runtime fee story, I wonder if there isn’t a bit of this here as well. If Unity wants to charge per install, I at least guess that the installation of Unity Runtime is using servers of Unity Technologies, and that somebody in the company figured out that in the millions these installs cost Unity something. That doesn’t excuse the horrible execution of the move, the excessive pricing, and the bad communication. But I am not excluding the possibility that these installs aren’t really free, and that the company is unwilling to subsidize them in the future.

Imagine you had to pay 1 cent per e-mail you. That wouldn’t really impact any regular user. But it would make the business model of spam a lot less attractive. This is a typical example of possible negative examples of giving something out for free. It creates wrong incentives, especially at large scale. A million times 1 cent is serious money, but a million times free is still free. The whole capitalist model and free market mechanisms stop working at “free”. This hit home hard this year when people discovered how “free” data were feeding the AI boom. It is one thing to give content for free to a single user, but something completely different to give all of your data for free to an artificial intelligence that might use them to compete with you.

I do think the idea to hand out stuff for free only in limited quantities, but charging for the same stuff in large quantities has merit. The transition from “free” to “only free in small quantities” will have to be better managed and communicated. But the general argument of there being costs like server costs that add up in large quantities isn’t unreasonable.

The reverse of the argument that people ought to be willing to pay for the things they currently get "free" is that in many - possibly most - cases, if they did have to pay, they would choose to go without the service or product altogether. This is particularly true in the case of digital and online services, many of which would never have made any inroads at all into mainstream use had there been an upfront fee. Would most people have bothered with Twitter, for example, if they'd had to pay a subscription to use it, let alone a per=tweet fee?

Of course, many of these services would still have had commercially viable userbases, willing to pay for the specific access they felt they needed, but like countless smaller, paid-for services, most of the world would be unaware they existed. The universality of quasi-utilities like Twitter, YouTube, Tik Tik or Google Search relies almost entirely on people believing they're getting them for nothing. The services that have already made themselves essential in this way can probably, if they're canny about it, move to some kind of paid-for version, relying on inertia and a perceived necessity to carry them over the resistance hump, but new services that seek to compete with them are going to have an even harder time convincing anyone to part with money.

I suspect the upshot of all of this will be a gradual reduction in reliance on and even interest in these services over time until they become much more of a choice than a perceived requirement. Every communications revolution has a frenzied novelty period in which it seems utterly dominant but eventually the frenzy calms down and what's left is a background hum. The internet/WorldWideWeb has had a good couple of decades but the honeymoon period is very clearly over until some step-change occurs. Maybe that could be AI but there are a lot of very powerful vested interests determined to stop it. If they succeed, we'll be in the doldrums until the next major technological innovation.
Well, Elon must have read your post and followed up with his version of the idea in an effort to stop Twitter bots. In his case, I'd consider charging for POSTING tweets and keep the platform free for readers. Might solve a lot of other issues on Twitter as well - I doubt the typical basement dweller would consider paying just to post hate tweets.
It still boggles my mind at times that we have so many online services and software available for free to the user that apparently make a profit through other means.
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