The illusion of free

By David Holt

Goods and services are getting cheaper. Many are free. Blame it on the Internet and globalization. The upside is that businesses can create new business models where costs are minimal, as Chris Anderson explains in Free: The Future of a Radical Price. The downside is that our brain chemistry is wired by evolution to love a deal. We love to consume, as Ellen Ruppel Shell writes in Cheap: The High Cost of Discount Culture.

In an age where we can go only a few minutes without staring at a computer screen (smartphones included), it is fair to ask what it is we are consuming. The answer is: Time and information.

People now walk holding their phones in front of them, text while at the cash at the grocery store, fiddle with them compulsively at the gym, check messages at the crosswalk. In the waiting room everyone is glued to the tiny screen. In the office, the phone sits beside the laptop and it isn’t all work. Head slouched forward is the new normal.

Think of all this clicking and scrolling as transactions. They seem free (or cheap, even when we pay), but they are not.

Powerful software is tracking our every click, analyzing, storing and selling it to other software. Purchases at the store–not just online–are tracked and added to giant databases. Targeted ads pop up on our screen, floating into our unconscious and influencing our decisions.

Time and information are the new consumables. The real economy lies beneath: a maze of data routed and tracked by software and stored on thousands of servers. The sound of the modern economy is a low hum.

If you think about it, it was always thus. Our entire lives are just a set of experiences, mediated by our thoughts and feelings. In buying, especially, anticipation is the key.

We don’t buy a car, but rather the ability to travel efficiently and pleasurably. “If I’d listened to my customers, I would have invented a faster horse,” said Henry Ford. He invented the sturdy, affordable automobile, but more than that he saw that he could create and we would buy. The horseless carriage was so much more appealing than the carriage itself.

He used information to create and refine his new business model exemplified by the assembly line and the reliable vehicle that could survive the wagon-rutted roads of his time.

Out driving on the open road, his customers were spending their most valuable commodity–their time. Compared to tending the horse and fixing the wagon, this was a deal.

Their buying decisions produced a lot of information about what worked and what was wanting. The cars required better roads and a fuel distribution system, gas stations and repair shops. Business guys watched the trends and new industries were unleashed.

Time and information–those are the ultimate currency of business. It was ever thus. There are deals everywhere, but what businesses really seek is the consumers’ time and information about their behaviour. The best way to get it nowadays is to provide the illusion of cheap or even free. But organizing information has a cost, as we know from thermodynamics. And someone has to pay.

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