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FREE

The Future of a Radical Price

By Chris Anderson

Hyperion, $34.99, 274 pages

***

In the future, more things will be free, and everything will cost. Chris Anderson is editor-in-chief of Wired Magazine and author of the bestselling business book The Long Tail. When he ruminates on the nature of the free economy and where it's taking us, people are going to listen.

Though others have taken on this subject before - Canadian writer Darren Wershler's Free as in Speech and Beer comes to mind - Anderson is a master of the anecdote and the quick thought. He packages musings on why and how business models based on giving away things for no price work with graceful summaries of 19th-century economic theories and folksy stories like the rise of everyone's favourite flavoured gelatin, Jell-O.

The result is an extremely entertaining business book that functions in two ways: If you're looking to make a buck, especially in a business that's based on bytes, not atoms, then this book dissects the various business models and how they work in great detail. Step by amusing step, Anderson takes us through canny schemes like Freemium, which is where people who pay for the premium version subsidize and make possible the large number of people content to use the lesser free service.

Meanwhile, if you're looking to understand how our world is being shaped by the idea that a great way to make money is to give your product away, then Free also has value. Take $20-billion-a-year company Google. It makes tons of money by giving away its products for free. Giving away pretty much every product it has - from search engines to maps to e-mail - has made Google one of the world's richest and most recognizable companies. It is so big that its global dominance is shaping the world. We are constructing our websites and online profiles so that they appeal to Google's search algorithms. Since our websites and online profiles are increasingly intimately linked to our actual businesses and lives, this means that, increasingly, we are constructing our actual businesses and actual lives to appeal to Google. This is how free is changing not just business, but life itself. Free isn't free. We're paying a price, one way or another.

Anderson puts it this way: "The more people use the Internet, the better it is for Google's core business. So if Google can use free to encourage people to spend more time online, it will make more money in the end." In other words, the more cool stuff Google gives us to do online, the more time we spend online generating information that we will then need help finding, ordering, characterizing and personalizing. I wonder what company can help us do that? By making it easier and easier for us to turn to the Internet for all things, from socializing to health care to banking to getting directions, Google is creating a massive market for its core, barely noticed business: selling ultra-specific advertising.

This has many implications for the economy, and, I believe, deep implications for society. The free business model as pioneered by Google is addictive and insidious. It encourages us to adopt and adapt to new products in ways that we have never done before. Because something is free, we actually start to change our lives in order to best access the service. We do this quickly and unconsciously. We post our personal pictures to Facebook for the amusement of our 400 "friends" because it's free to do so. We send 15 twitters a day because we can. We "share" our secrets, feelings and opinions on sites as disparate as Amazon, eBay, PostSecret and Linkedln because we are told they are "free."

But of course the aren't free, not really. As Anderson points out in many different ways, what seems to be free is really just a transfer of value. We always pay eventually, somehow. We pay with our time, we pay by allowing access to the intimate details of our private lives, we pay in a thousand different tiny ways that are increasingly difficult to detect. Ultimately, we pay by unconsciously shaping our lives to conform to the strictures of the supposedly "free" product that we suddenly can't seem to live without.

This should be on the curriculum starting in kindergarten: Free isn't free because, kiddies, in corporate North America there is no such thing as a free lunch. If there's one flaw in this book, it's that Anderson spends too little time addressing the social costs of this rapidly emerging free economy. Television was once a free, ad-based service too. And just as the free knowledge-based businesses are doing now, it rapidly shaped lives and society around it, mostly without us even noticing. From the 1950s, when television became widely available and widely popular in North America, to the present day, we have become heavier, less willing to participate in our local community activities, more in debt, more depressed and anxious, and more divorced. All those things can be linked, at least in part, to the influence of television - still clinging to its status as the world's most lucrative "free" product.

Though obviously an enthusiastic cheerleader for the give-your-product-away model, Anderson's pithy, breezy reports on how companies have and are succeeding or failing in their efforts to adapt to "free" make this book a pleasure to read. More important, his central idea - that free is the price we have to pay to do business - is one we can't afford to ignore.

Hal Niedzviecki is the author of the newly released book The Peep Diaries: How We're Learning to Love Watching Ourselves and Our Neighbors.