To Rake It In, Give it Away

It is easy to see why free is an appealing price for consumers, although how companies make money by giving stuff away is less obvious. In “Free: The Future of a Radical Price,” Chris Anderson, the editor of Wired magazine and the author of “The Long Tail,” sets out to explain why free is an increasingly compelling business model.

Mr. Anderson explains how the underlying economics of digital services make free business models far more widespread than they were in the analog world. Central to the new “free economy,” he says, are the “near-zero ‘marginal costs’ of digital distribution (that is, the additional cost of sending out another copy beyond the ‘fixed costs’ of the required hardware).” So Google spends billions on its software and infrastructure, to get its vast search engine up and running, but each incremental search costs it almost nothing.