Chris Anderson started The Long Tail as a feature in Wired and he is doing the same with his new book “Free” in the current issue. He explains how Free has been part of economics for quite some time and why it’s becoming more common and essential due to the digitalization of many industries.

The rise of “freeconomics” is being driven by the underlying technologies that power the Web. Just as Moore’s law dictates that a unit of processing power halves in price every 18 months, the price of bandwidth and storage is dropping even faster. Which is to say, the trend lines that determine the cost of doing business online all point the same way: to zero.

The Web has become the land of the free. The difference between cheap and free is what venture capitalist Josh Kopelman calls the “penny gap.” People think demand is elastic and that volume falls in a straight line as price rises, but the truth is that zero is one market and any other price is another. In many cases, that’s the difference between a great market and none at all.   

The article is a good read with relevance, insights and pretty much wraps up the entire idea. It should be interesting to see where he takes Free and how he thinks it should fit into business models in the complete book. Make sure you read the comments to get other takes on “Free” at the full post here.