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.