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The Web has become the land of the free.

He sold razors in bulk to banks so they could give them away with new deposits ("shave and save" campaigns).

Thanks to Gillette, the idea that you can make money by giving something away is no longer radical.

Chris Anderson (canderson@wired.com) is the editor in chief of Wired and author of The Long Tail. His next book, FREE, will be published in 2009 by Hyperion.

Free! Why $0.00 Is the Future of Business

But tell that to the poor CIO who just shelled out six figures to buy another rack of servers. Technology sure doesn't feel free when you're buying it by the gross. Yet if you look at it from the other side of the fat pipe, the economics change. That expensive bank of hard drives (fixed costs) can serve tens of thousands of users (marginal costs). The Web is all about scale, finding ways to attract the most users for centralized resources, spreading those costs over larger and larger audiences as the technology gets more and more capable. It's not about the cost of the equipment in the racks at the data center; it's about what that equipment can do. And every year, like some sort of magic clockwork, it does more and more for less and less, bringing the marginal costs of technology in the units that we individuals consume closer to zero.

From the consumer's perspective, though, there is a huge difference between cheap and free. Give a product away and it can go viral. Charge a single cent for it and you're in an entirely different business, one of clawing and scratching for every customer. The psychology of "free" is powerful indeed, as any marketer will tell you.

this business model is now the foundation of entire industries: Give away the cell phone, sell the monthly plan; make the videogame console cheap and sell expensive games; install fancy coffeemakers in offices at no charge so you can sell managers expensive coffee sachets.

Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.

As much as we complain about how expensive things are getting, we're surrounded by forces that are making them cheaper.

What does this mean for the notion of free?

YouTube is basically going under the assumption that there's this community in place to blindly create content on YouTube's behalf without much in the way of compensation."

What Uncle Miltie and the Super Bowl and Survivor have always offered is something to talk about at the water cooler, at the nail salon, or on IM.

For instance, if you are, say, Meow Mix, and you bought ads adjacent to cat-related videos, how surprised and disappointed you might be to learn you have sponsored a YouTube video uploaded by someone named mrwheatley and titled "exploding cat." Or the one from qu1rk89 titled "exploding cat." Or this one: "ma907h eats dead cat," which shows a guy … oh, never mind.

Will advertisers risk associating themselves with violence, pornography, hate speech, or God knows what lurks out there one click away?

#2 Will advertisers risk associating themselves with violence, pornography, hate speech, or God knows what lurks out there one click away?

that so many people are already on YouTube

Everyone else wants to see what everyone else is seeing and enjoying."

Advertisers and brands are enormously risk averse,

Supan insists that YouTubers have done an excellent job of policing their own space

Will advertisers risk associating themselves with violence, pornography, hate speech, or God knows what lurks out there one click away?

Will advertisers risk associating themselves with violence, pornography, hate speech, or God knows what lurks out there one click away? " Advertisers and brands are enormously risk averse, "

And with a $177 billion total domestic ad budget at stake, nobody wants to be monkeying around.

And prosper, despite everything, for one overriding reason: 100 million streams a day.

"What it has going for it is its sheer size. In a fragmented world, there is a need for community and a need for massness."

"There's still a desire to have a shared cultural context. We hunger for things we can discuss."

waiting for a technological solution

that ask members to rate each video against various quality and suitability criteria.

but also to make much of it available to amateur video makers in exchange for a split of ad revenue.

What Uncle Miltie and the Super Bowl and Survivor have always offered is something to talk about at the water cooler, at the nail salon, or on IM.