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Free Kills

Everyone is all excited about the idea of free. Free software, free content, and Chris Anderson’s book, Free: The Future of a Radical Price.

But it’s not always good.

When something is given away free, it kills the market for similar products.

iTunes is a very adequate music manager. But it doesn’t work well for large collections, multiple users, or home networks. By giving it away to almost everyone, there is no more market for music manager software.  No one is ever going to pay for it again, so no software developers have a reason to build something better.

RSS feeds would be very useful if you could get them from password-protected sites. But Google Reader doesn’t support password-protected feeds. And almost all the developers of RSS-reader software went broke when Google started giving it all away. The feature is gone for everyone.

You should be worried if you are someone who uses advanced word processor features (author) or spreadsheet features (investor, scientist). Free Google Docs could wipe out the financial incentive for companies to develop high-end products. Who works on improving the word processor when 95% of people will never pay for it? (We sure don’t want to go back to the early ’90s when you had to pay extra for third-party graphing, spell-check, and other add-ons for your word processor.)

The free-but-adequate solution kills demand and funding for the development of better solutions.

In international trade, we call this dumping — when a country sells products below the cost of production to take over a market and kill domestic production (to presumably raise the price when competitors are dead).

Something to think about.

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