Not just the “bits”, the original target of Moore’s Law are halving in price every couple of years, lots of other things are as well.
For many goods and services, the whole notion of charging at marginal cost has been thrown on its head, because in many cases marginal cost has become negligible.
The internet has created the most competitive market the world has ever seen.
Barriers to entry are almost zero, and the marginal cost of production is zero. Therefore, how do you price this product, as price has always followed the marginal cost in traditional models.
The consequence is that over time, as things evolve on the internet, the for “free” component will increase, and the audience will increase, in numbers, but those who want “depth” will still be prepared to pay for it.
Disruptive innovation has used this model for 150 years.
Jell-O, effectively dried granulated gelatin in a box was given away in the 1880’s as a means to develop a market.
Linux software is the best known recent example of free stuff on the net, but it is every where, so the marketing challenge is to evolve a business model that enables you to make money when giving it away.
On of my clients has a unique information product that offers useful generic information covering an industry, but then has the scope to generate very specific and competitively useful information for individual enterprises and situations at a much deeper level of analysis. The debate about the best pricing model is proving to be very interesting indeed.
