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If "free" is what you want - and who doesn't? - "free" is what you're going to get.

So says Chris Anderson, editor-in chief of Wired magazine and, according to Time magazine, one of the world's Top 100 influencers.

Speaking to The Globe and Mail from his office in San Francisco, the author of The Long Tail, who pseudonymously curates Wikipedia entries in his spare time, explains how "free" has emerged as the new economic model.

Let's start with the term "freeconomics." What is it and how do you define it?

It's a little bit cheeky, I know. It's a rip-off, of course, of Steven Levitt. It's a bit of a joke. ... There are three kinds of free in the world. There's the model that's 100 years old and that's, you know, razors and blades, cross subsidies. You get the razor for free and you pay for the blades. Today we see that in everything. You get your cellphone for free but you pay for the minutes ... that's the old model of free. Then there's the model that emerged in the sort of middle of the 20th century. This is the media model ... where the consumer doesn't pay but a third party - in this case, the advertiser - pays for access to the consumer. ... What's happened online is that the media model has been extended to all sorts of things that aren't traditional media, with Google being the best example ... anything you can subsidize with advertising becomes a third-party pay, so that it's free to the consumer. But there's a third form of free, which is the fascinating one that's really just now coming of age ... where really nobody pays ... One of the unique things about Internet economics is that, unlike traditional economics, where the raw materials and the labour and the power is not zero, online all the inputs - the bandwidth, the storage, the processing - are all super cheap and getting cheaper every year. We've never seen an economy like this.

So just to be clear, what you're really saying is the foundation of this new model lies in bandwidth, storage, processing power, all on their way to being, to use your term, too cheap to meter or too cheap to matter economically.

Precisely. And then you revert to classic economics. You learn this in the first week of economics, but you never really pay attention to it ... In a competitive market the price falls to the marginal cost. ... You never think of the marginal cost falling to zero because, in most markets, it doesn't fall to zero, but online the marginal cost - that is, the cost to serve a web page or a software [application] - to a consumer is falling to zero. Today it may be one cent. Tomorrow it will be a tenth of a cent. The next day it may be a hundredth of a cent. ...

The marginal cost falls to zero so the price falls to zero.

This isn't really a matter of choice or a matter of innovation. It's sort of like the laws of physics.

So free becomes inevitable then?

Free becomes inevitable ... The question is not, could it be free. The question is, how soon must it become free, because if we don't make it free somebody else will.

Money has to change hands somewhere along the line, does it not? The content has to be monetized?

It does not, it does not. ... There is a world out there that doesn't involve money at all. Wikipedia is an encyclopedia where no money changes hands. The blogosphere is largely a publishing media enterprise where no money changes hands. ... If you're a business and you're in the encyclopedia business, you're competing with Wikipedia and it's not because Wikipedia has some business model you can emulate. Wikipedia has no business model. They've just demonetized the industry. There it is.

Are you saying that any industry that can be digitalized can necessarily be demonetized?

When I say demonetized there are two aspects. One is demonetized from a consumer perspective. In other words, you don't pay. The other is demonetized in that no one makes any money anywhere. It will depend from industry to industry. In the case of encyclopedias, we're probably going to demonetize that industry. ... There are other industries where you're not demonetizing it. What you're doing is saying web mail is free to consumers now. The really, really active web mail users who want special features ... really almost become price insensitive - they're wedded to full functionality web mail. In that case, you can charge that 1 per cent, or 0.1 per cent, quite a lot of money.

This is the so-called "freemium"?

This is the freemium model. It's the inversion of the typical free sample. In the free samples, we think of perfume or little bits of muffin from Starbucks. ... You give away 1 per cent to sell 99 per cent. ... The nice thing about digital services is because the underlying product doesn't cost anything, you can give away 99 per cent to sell 1 per cent. Today you see more and more businesses built around freemium. That's the Flickrs, the web mails. Because the underlying product is so cheap to offer, you can subsidize the 99 per cent with the 1 per cent.

You've used the word "subsidize," so therefore the 1 per cent has to exist in order for the 99 per cent to be subsidized.

In that particular instance. Or if it's advertising supported, then the advertisers have to exist to support the consumers. That model does still exist in terms of the advertising industry. Google, etc. ... Google is a very profitable company that makes billions by not charging consumers.

I guess I'm curious about what the future of that is.

What's the future of advertising? Is it possible for advertising to be free to the advertiser? Absolutely. I just think we won't call it advertising. ... I'm a geek, as you might have guessed. I have a lot of geeky interests. I subscribe to blogs of engineers about various topics of interest. Those engineers work for companies. Those blogs are about their companies' products. ... Is it advertising? It's certainly not described as advertising. It isn't paid for. It doesn't come from the marketing department, and yet it may have the effect of advertising in the sense that it communicates information about a product to an interested consumer.

I think what you've just described kind of frightens me a bit. The notion that something becomes so intellectually embedded that you don't necessarily know what it is you're getting in terms of advertising integrity or its obverse, editorial integrity.

You've now hit an issue that only comes up when I'm talking to media people. I'm a media person, so I have a lot of sympathy. This whole thing about Chinese walls and church and state and ad versus edit and editorial independence, this is something that the generation that has grown up on Google just doesn't care about.

You've written a new book on the concept of free. Is it finished? Does it have a subtitle?

It's not finished and it doesn't have a subtitle.

Will it be free?

Yeah, of course. How could it be otherwise?

Are there going to be ads embedded in the book?

Ah! So how is it going to be free? Let's start with the digital forms. So the audio book, that's an MP3. That's going to be free. There's the e-book. That's a digital file that's going to be free. There's the web book on the website, page per view, that's going to be ad supported and free. And then there's the physical form of the book. ... One that's going to be sponsored with ads and you get that for free. ... Then there will be the traditional form without ads for which we will charge you $24.95.

The ones with the ads: How is that physically going to appear to me?

Probably ads on the inside front cover and the inside back cover and a couple in the centre.

Will cars be free?

Cars will be free. There's a chapter in my book about a car company in Israel called Better Place, an electric car company. The car is free and you pay for the electricity.

At the end of the day, will everything be free?

I think a surprising number of things will be free in a version.

So that really does take us into the arena of a whole new economic model.

It's partly a new economic model and it's partly the psychology of free. It's partly recognizing that zero point zero has a special place in our psychology. It gets our attention.