Everything for Free? The brave new world is flawed

An exciting new book has hit the stands - it contains the next big idea and we should all buy it. "Free: The Future of a Radical Price" isn't free at all. It's the latest wheeze from Chris Anderson, who came up with the now largely discredited "long tail" theory.

(The idea behind the long tail is that since a virtual shop, unrestrained by shelf space, can sell millions of titles, suddenly people will be able to make real money by selling a few copies of each of the vast array of books, albums or whatever else is out there. It turned out not to really work, but why let a little thing like reality get in the way of a good evangelistic Internet theory).

This latest work argues that, as more and more things can be produced pretty much for free, we're going to have to get used to it and change the way we work. More people will work for non-financial benefits (e.g. the adulation awarded to bloggers - in their fantasies at least). Think of online newspapers, of Twitter, Facebook, YouTube, Last.FM, Spotify.

It's an issue I looked at a few months ago. My conclusion (and I'm far from alone) differs from Anderson's. I don't see the free model as sustainable beyond cottage industries like blogging. It's all very well talking about the marketplace driving costs down and people being motivated by rewards other than money, such as peer recognition, but we all need to earn money somewhere down the line.

There are two ways it can go.

Some services will work as loss-leaders or advertising-generators for the big boys, but the smaller fish will be driven out of business. That's what happened with email: Hotmail and now Google Mail destroyed any idea that a company could charge money for consumer email accounts.

Others will stop being free when the money runs out: they'll either find a business model that works, or they'll vanish when it becomes apparent no-one's willing to pay for them.

Those of you who are clued up on such things will have noticed that this debate has been going on for twenty years or more, not about information and media, but computer software.

Free and open source software doesn't have to be given away (it's free as in freedom, not free as in beer) but it normally is. Its creators either seek non-financial rewards, such as the approval of their peers and users, or make money elsewhere (IBM pays programmers to work on open source projects, believing it allows them to make more money on hardware and services).

But the funny thing is that it turns out to be quite hard to get that model to work. Sure - there's loads of free and open source software out there. A lot of it's even quite good (I use it myself almost exclusively). But there are very few examples where the best open source option is as good or better than it's proprietary equivalent.

Ever compared OpenOffice.org to Microsoft Office? Sure, OpenOffice is good enough for most of our needs, but it's a long way from being the superior product. Gimp vs Photoshop? Scribus vs Quark Express? Ubuntu vs Mac OS X?

Amongst the thousands of software packages out there, in just a handful might a free/open source variant be truly superior. Perhaps Firefox (funded by Google to tune of several million pounds) and some others you may not have heard of but use every day (Apache, BIND, Sendmail...).

The result is that, commercially, there are thousands of companies continuing to do well selling proprietary software, because for all the talk of revolution and zero pricing, people prefer it. How many are making serious money from creating free and open source software? A handful. Red Hat and Novell, maybe. You could have fifty Red Hats and their combined market capitalization still wouldn't match Microsoft.

What does that tell us?

Open Source Software is in a similar position to the likes of Facebook and Twitter, only without the venture capital and speculative funding. If you want to see Anderson's future world of free information, see it today in open source.

You have organisations creating software and giving it away. Their programmers, designers, artists, documeters and the rest are mostly volunteers who need day jobs to survive. They don't have big marketing budgets - they mostly rely on word of mouth and (frequently very poor) websites.

And we can see how this zero-cost-to-consumer model stacks up. It does OK. It survives. It grows. But it doesn't eclipse its paid-for alternative. OpenOffice.org is a struggling project (now owned by Oracle, its future is uncertain). Microsoft Office charges on.

So there won't be a revolution where information is all free and we have to find new ways of motivating everyone to work for nothing.

What's more likely is a day of reckoning, when the venture capital and financial reserves run out. Some services will continue as loss-leaders for Google, Microsoft, News International or some other huge beast. Others that are free today will become paid for - and will survive on that basis, just as proprietary software has survived and flourished in the face of open source. And many will fold.

Back in April when I last wrote about this, I looked at loss-making services like Twitter, YouTube and Facebook and wondered would would happen to them. I thought then than they might be replaced by open source alternatives that, whilst perhaps not as good, would be financially viable.

I've changed my mind on that one now - I think I was wrong. The problem is that the biggest cost by far for these modern cloud applications isn't the software, it's the hardware. Server room upon server room filled with computers, disks and wires. That isn't suddenly going to become free.