Have you noticed there are an increasing number of goods and services are free? This is especially true if the goods/services are from the ever-increasing number of companies that act in the digital environment. According to this article, one of the reasons is because of declining marginal costs. As more users utilize the service, the cost per user decreases. For the internet, storage (Gmail, Yahoo mail), bandwidth (YouTube, Daily Motion, etc.) and processing speed (Google) are all free for the user.
Other examples included are: what may appear to be free to the user, is subsidized by a third party. For example, some free services on the internet are subsidized by licensing fees, fees for “exclusive” content, advertising revenue and information about subscribers. Digital technologies will only continue to operate in the free economy.
More examples include: Promoting products/services using cross subsidies, that occurs when a product/service is free, but the complementing product/service is not; Open Sourcing occurs when completely free product/services are developed and continuously improved by a community of users; and finally, web sites and services using a labor exchange are free because using and contributing to the web site creates value.
More examples of the free economy click here.