Ethos Perspectives
The Free Economy
The Implications of Free
An Egalitarian, Consumer-centred Revolution
Another means by which Free is possibly a radical change, is in its egalitarian outcomes. In most segments of the Free economy (bar Freemium), any user can use the best product on the market, as his ability to pay is taken out of the equation. That is not the case in the non-Free, market economy, where price is the allocative mechanism, and where the type of service one can enjoy is contingent upon one’s ability to pay.
The other implication of Free is that larger firms will no longer be able to defeat smaller competitors by undercutting them on price, as costs are universally minute. Firms are then forced to focus on ensuring that their products serve the needs and desires of users. For example, a start-up like Facebook could usurp the previously dominant MySpace by providing a superior product 21.
The consequence is that not only does Free lead to a more egalitarian outcome, it forces firms to prioritise the needs of the consumer.
Rethinking Copyright
Copyright laws exist because it is assumed that without the exclusive right to derive monetary benefit from intellectual property, innovation and creativity will cease.
The rapid expansion of non-monetary Free demonstrates that the assumption that we respond mainly to the lure of profit is not necessarily true. The failure of copyright enforcement online, where duplicating and sharing music or video files is difficult to detect and even harder to universally enforce, has not resulted in a sudden dearth of musicians. Instead, there are more musicians than ever, as the same technology allows a greater number to share their music 22. It reflects the varied, often non-monetary motivations for creating intellectual property.
If copyright laws are no longer enforceable, or even necessary, is there a case for re-examining legislation and re-defining the rights of intellectual property owners?
What Does Free Mean for Governments?
How governments can use Free
Governments can use the psychological underpinnings of Free as a policy lever to achieve rapid adoption of policy initiatives. For example, the Infocomm Development Authority (IDA), together with three private internet service providers, rolled out the Wireless@SG initiative in December 2006, which seeks to extend wireless broadband internet coverage into public spaces. IDA managed to grow rapidly, and significantly exceed its initial target number of registered users mainly because the basic service was offered free under the Freemium model.
However, governments are also not immune from the weaknesses of Free business models. Wireless@SG, for example, faces the same dilemma as Free businesses: how to monetise without jeopardising one’s user base. In the case of IDA, there is broader policy objective of encouraging adoption of infocomm technology to consider.
When Wireless@SG was announced, it was to remain free for only two years. The Free window was subsequently extended twice. Wireless@SG is now Free till 31 March 2013. Given the power of the Penny Gap, it remains to be seen if Wireless@SG can ever go fully Paid and become commercially viable.
Free and privacy implications
The propensity for Free businesses to be involved in activities that handle personal data might require privacy laws to be updated. While Singapore has industry-specific legislation protecting personal data, it does not have general overarching data protection or privacy legislation. The current legal framework rests upon self-regulation, with IDA supplying a Model Data Protection Code that firms are encouraged to adopt. Should more businesses go Free, legislation or regulations that were enacted to regulate traditional Paid transactions may need to be updated.
Unfortunately, there is currently little that domestic legislation can do to protect users of websites hosted overseas.
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