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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).

Milton Friedman himself reminded us time and time again that "there's no such thing as a free lunch. "But Friedman was wrong in two ways. First, a free lunch doesn't necessarily mean the food is being given away or that you'll pay for it later — it could just mean someone else is picking up the tab. Second, in the digital realm, as we've seen, the main feedstocks of the information economy — storage, processing power, and bandwidth — are getting cheaper by the day. Two of the main scarcity functions of traditional economics — the marginal costs of manufacturing and distribution — are rushing headlong to zip. It's as if the restaurant suddenly didn't have to pay any food or labor costs for that lunch. Surely economics has something to say about that?

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.

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

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.

Free! Why $0.00 Is the Future of Business

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?

As for Sacerdoti's so-called postroll ads, even the most self-satisfied marketer > wants to know who in the world would stick around to watch – or, more to the > point, who can prove that anyone did. >

"They've got the audience,

YouTube actually encourages this – so long as the free posts are accompanied by paid versions.

A lot of those upload monkeys have a nasty habit of posting clips from TV shows or enhancing their clips by adding music tracks – which, of course, are somebody else's property.

YouTube refused to sell ads appended to either end of a video

#2 "They've got the audience

So what about "Evolution of Dance," for instance? To put together this medley, did Laipply license 30 songs?

"I think its the beginning of the end of youtube as we know it," wrote a poster named SamHill24. Another, Link420, declared simply, "ITS OVER!!!! youtube is screwed."

In short, what if there were a missing link between the old model and the glittering new one? What would happen then?

AS SOMEBODY ONCE SAID, 100 million people can't be wrong. They can, however, be useless. It turns out that success is 1 percent inspiration, 99 percent monetization.

#11 A lot of those upload monkeys have a nasty habit of posting clips from TV shows or enhancing their clips by adding music tracks – which, of course, are somebody else's property.

YouTube refused to sell ads appended to either end of a video

As for Sacerdoti's so-called postroll ads, even the most self-satisfied marketer wants to know who in the world would stick around to watch

Which may suit the users just fine. One of the biggest obstacles to advertising success is the damage that success could inflict on the YouTube experience, till now an oasis of relative noncommercialism in a world of brand inundation

But speculation abounds that copyright holders have just been waiting for someone with deep pockets, such as Google, to acquire YouTube, whereupon the lawsuits will fly.

one killed aborning by copyright infringement issues

Photobucket,

"we are at the very, very beginning of online video."

fatally intrusive

But even 100 million daily streams and $1.65 billion into the evolution of this species, how it will actually thrive is a mystery. "If anybody tries to answer that question

It, too, was a peer-to-peer revolutionary – one killed aborning by copyright infringement issues .

. It, too, was a peer-to-peer revolutionary – one killed aborning by copyright infringement issues .

It, too, was a peer-to-peer revolutionary – one killed aborning by copyright infringement issues .

It, too, was a peer-to-peer revolutionary – one killed aborning by copyright infringement issues .

It, too, was a peer-to-peer revolutionary – one killed aborning by copyright infringement issues .

The second big issue is the nightmare of protecting intellectual property. As eager as Madison Avenue is to push stacks of chips online, in the back of its mind is Napster. It, too, was a peer-to-peer revolutionary – one killed aborning by copyright infringement issues . Nobody wants to invest only to see the fledgling industry paralyzed with litigation, regulation, or legislation. And it is not an idle fear.

Actually, that's an easy one: Procter & Gamble would be ecstatic

The price tag for YouTube, just to put the investment in perspective, is what Target paid for 257 Mervyns department stores and four distribution centers in 13 states

Jarvis calls the phenomenon "exploding TV," and YouTube is exploding faster than anything else:

And there they are, in the bedrooms and dorms and cubicles of the world, uploading their asses off, more than 65,000 times a day on YouTube alone.

be somebody

But don't sell Google short. Not long ago, all it had was a search algorithm and a cool logo. Now, after reinventing online advertising, it has revenue of $9.3 billion a year and good reason to believe that neither of those daunting prerequisites is out of the question.

Type in "sweet tired cat" and watch a drowsy kitten dozing off. The clip, which was viewed nearly 2 million times in two weeks, is 27 seconds of such concentrated cuteness that you might actually have a stroke and die. It's that excruciatingly adorable. And, as it turns out, extremely valuable. Google – as you may have read in every publication, online and off, in the entire freaking world – just paid #3 $1.65 billion in stock to be the cute little kitty-cat's home.

#6 And there they are, in the bedrooms and dorms and cubicles of the world, uploading their asses off, more than 65,000 times a day on YouTube alone. "If you aren't posting, you don't exist," says Rishad Tobaccowala

from a standing start about a year ago to more than 100 million videostreams a day. It was on YouTube, not Saturday Night Live, that the world fell in love with "Lazy Sunday." It was there that we found ourselves smitten, intrigued, and ultimately betrayed by Lonelygirl15. And it is there that more than 65,000 videos go every day, their creators posting what they think are video clips but that are also improvised explosive devices laying waste to the old order.

evolution of dance,"

"Noah takes a photo of himself everyday for six years." A time-lapse documentary of Noah Kalina over 2,356 days, it's a little thin on plot, but it nonetheless racked up more than 3 million views in six weeks.

It is horrifying. It is cruel. It is hilarious.

to step in front of the whole world

"Numa Numa,"

A recent Accenture study of 1,600 Americans found that 38 percent of respondents wanted to create or share content online.

"If you aren't posting, you don't exist," says Rishad Tobaccowala , CEO of Denuo, a new media consultancy. "People say, 'I post, therefore I am.'"

But don't sell Google short

"Noah takes a photo of himself everyday for six years."

#1 It features a courageous but overmatched freshman named Brian Collins presenting the worst sports-highlight rundown in human history, culminating in the worst sportscaster catchphrase ever conceived: "Boom goes the dynamite." #2 It is horrifying. It is cruel. It is hilarious.

Judson Laipply's seamless sampling of footwork to 30 songs, from Elvis to 'NSync, pretty much is.

19 Until about five minutes ago, remember, almost all video-entertainment content was produced and distributed by Hollywood. Period. That time is over. There was a time when advertisers could count on mass audiences for what Hollywood thought we should be watching on TV. That time is all but over

Noah takes a photo of himself everyday for six years."

"boom goes the dynam it > >e."

When you put together a million humans, a million camcorders, and a million computers, what you get is YouTube.

So why is it worth nearly six times the gross domestic product of Micronesia?

Google has recently bet the equivalent of 257 Mervyns stores that the rise of video-sharing is more than just the latest rage.

"The simple, wonderful, delirious fact is that people like you and me can now make and share content."

the hitherto futile aspirations of the everyman to break out of his lonely anonymous life of quiet desperation, #11 to step in front of the whole world and #12 be somebody , dude.

including, but not limited to, a reallocation of the $67 billion that advertisers spent on TV in the US last year.

It is horrifying. It is cruel. It is hilarious.

the hitherto futile aspirations of the everyman to break out of his lonely anonymous life of quiet desperation, to step in front of the whole world and be somebody >, dude.

"People say, 'I post, therefore I am.'"

YouTube's fixed assets pretty much consist of a video

It's just a little outtake from a Ball State University campus TV newscast

Search around some more. Type in " evolution of dance," which has got nearly 35 million views in six months. You wouldn't think "Ohio motivational speaker's grand finale" would equal "mesmerizing," but Judson Laipply's seamless sampling of footwork to 30 songs, from Elvis to 'NSync, pretty much is.

"sweet tired cat"

"People say, 'I post, therefore I am.'"

"Boom goes the dynamite." It is horrifying. It is cruel. It is hilarious.

"mesmerizing

It's that excruciatingly adorable.

weirdly fetching Romanian pop song.

When you put together a million humans, a million camcorders, and a million computers, what you get is YouTube.

therefore I am

Or try the accurately titled "Noah takes a photo of himself everyday for six years." A time-lapse documentary of Noah Kalina over 2,356 days, it's a little thin on plot, but it nonetheless racked up more than 3 million views in six weeks.

You'd better also see "Numa Numa," which stars a chubby young man in his New Jersey bedroom lip-syncing to an insipid but weirdly fetching Romanian pop song

"If you aren't posting, you don't exist," says Rishad Tobaccowala, CEO of Denuo, a new media consultancy. "People say, 'I post, therefore I am.'"

Type in "evolution of dance," which has got nearly 35 million views in six months.

aspirations of the everyman to break out of his lonely anonymous life of quiet desperation, to step in front of the whole world and be somebody

OK, guess. But that guesswork begins in a very special, very poignant, and potentially very lucrative place: the hitherto futile aspirations of the everyman to break out of his lonely anonymous life of quiet desperation, to step in front of the whole world

"evolution of dance,"

YouTube's fixed assets pretty much consist of a video interface and a cool retro logo. So why is it worth nearly six times the gross domestic product of Micronesia?

You'd better also see "Numa Numa," which stars a chubby young man in his New Jersey bedroom lip-syncing to an insipid but weirdly fetching Romanian pop song. Or, what the hell, live dangerously. Type in "sweet tired cat" and watch a drowsy kitten dozing off. The clip, which was viewed nearly 2 million times in two weeks, is 27 seconds of such concentrated cuteness that you might actually have a stroke and die. It's that excruciatingly adorable.

t was there that we found ourselves smitten, intrigued, and ultimately betrayed by Lonelygirl15. And it is there that more than 65,000 videos go every day, their creators posting what they think are video clips but that are also improvised explosive devices laying waste to the old order.

When you put together a million humans, a million camcorders, and a million computers, what you get is YouTube

Type in "sweet tired cat" and watch a drowsy kitten dozing off. The clip, which was viewed nearly 2 million times in two weeks, is 27 seconds of such concentrated cuteness that you might actually have a stroke and die. It's that excruciatingly adorable.

But that guesswork begins in a very special, very poignant, and potentially very lucrative place: the hitherto futile aspirations of the everyman to break out of his lonely anonymous life of quiet desperation, to step in front of the whole world and

A recent Accenture study of 1,600 Americans found that 38 percent of respondents wanted to create or share content online.

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.