"The internet has revolutionised economics," says Anderson down his cellphone as he drives to work in California. "On the web, the marginal costs of manufacturing and distribution are zero, or close to it. This means that you can now experiment with giving away one thing to sell something else much more than you could in the pre-internet era. Or you can experiment with third-party support, where you give away a product to sell attention to another. The traditional model is of giving 1% of goods away as samples in order to sell 99% of the product; on the web, you can give 99% away as free samples to sell 1%." You're kidding, I say to Anderson. And still make profit? "Sure. Why not."
Since giving stuff away free online is a subject directly related to issues like Digital Rights Management, I found this Guardian interview with Wired editor Chris Anderson on his concept of 'freeconomics' fascinating reading, although I'm not sure I agree with everything he has to say by any means.