Freeconomics?

Rarely do I come across a business press article that introduces (and applies) as many basic economic concepts as this one by Chris Anderson. Anderson makes the case that the internet (and the digital economy in general) has fundamentally changed the way businesses do business. In a digital economy, according to Anderson, competition necessarily drives prices to zero. Thus, the price of music, software, and movies, for example, will essentially be "free."

The notion of a free good is alien to most introductory chapters in a typical economics text (such as your Krugman text). As Milton Friedman is famous for saying: TANSTAAFL! The basic argument against the concept of "free" is that we possess unlimited wants yet live in a world with scarce resources: to get more of one thing requires us to give up a little (or a lot) of something else.

Read Anderson's article and tell me if you agree or disagree with his main thesis. If you agree with his idea, can you come up with your own example of a product or service that will eventually be priced at zero? Explain why. If you disagree with his idea, can you explain what the "hidden price" is of the various examples he gives in the article?

Hat tip to Newmark's Door for the article.