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Free is overrated as a destiny. It is only the second phase of the three stages of copydom. The first phase -- perfection -- is experienced in both analog and digital. Perfect duplication made the modern world and modern music.

The second stage is freeness. Costless duplication made Napster possible and a music revolution thinkable.

Yet it is in the third level of digital copy-ness that the real revolution lies. This third power is liquidity, and it will take music beyond Napster.

Every network technology follows a natural life cycle,
roughly broken into three stages:

• Prestandard
  
• Fluid
  
• Embedded
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

A firm’s strategy will depend on what phase a network is
in.

The task, then, is to create new things to send down the
slide—in short, to invent items and services faster than they are
commoditized.

This is easier to do in a network-based economy because the
crisscrossing of ideas, the hyperlinking of relationships, the agility
of alliances, and the nimble quickness with which new nodes are created
all support the constant generation of new goods and services.

If goods and services become more valuable as they become
more plentiful, and if they become cheaper as they become valuable, then
the natural extension of this logic says that the most valuable things
of all should be those that are ubiquitous and free.

Ubiquity drives increasing returns in the network economy.
The question becomes, What is the most cost-effective way to achieve
ubiquity? And the answer is: give things away. Make them free.

The natural question is how companies are to survive in a
world of such generosity? Three points will help.

First, think of "free" as a design goal for
pricing. There is a drive toward the free—the asymptotic
free—that, even if not reached, makes the system behave as if it
has been reached. A very cheap rate can have an effect equivalent to
being outright free.

Second, pricing a core product as free positions other
services to be expensive. Thus, Sun gives Java away to help sell
servers, and Netscape hands out consumer browsers to help sell
commercial server software.

Third, and most important, following the free is a way to
rehearse a service’s or a good’s eventual fall to free. You
structure your business as if the thing that you are creating is free in
anticipation of where its price is going. Thus, while Sega game consoles
are not free to consumers, they are sold as loss leaders to accelerate
their journey toward their eventual destiny—to be given away in a
network economy.

But the migration from ad hoc use to commercialization
cannot be rushed. To reach ubiquity you need to pass through
sharing.

Increasingly we see technologies pass through a
protocommercial stage. Huge numbers of people, exerting millions of
hours of collective effort, will jointly craft hundreds of thousands of
creations, but without the exchange of money. An entire society
following the free! Author Lewis Hyde long ago called this arrangement a
gift economy. The central task in a gift economy is to keep the gifts
moving. By social debt, barter, and pure charity, gifts circulate and
generate happiness and wealth.

Maximize the opportunities of others.
>

In every aspect of your business (and personal life) try to allow
>

others to build their success around your own success.
>

So how can we make the claim that
>
all
>
businesses
>

in the world will be reshaped by advances in chips and glass
>

fibers and spectrum? What makes this particular technological
>

advance so special? Why is the business hero of this moment so
>

much more important than its recent predecessors?
>

Because communication—which in the end is what the
>

digital technology and media are all about—is not just a
>

sector of the economy. Communication is the economy.
>

The Singularity Is Always Near

There’s a visceral sense we are experiencing a singularity-like event with computers and the world wide web. But the current concept of a singularity is not be the best explanation for the transformation in progress.