Financial Genius

The concept of a ‘free economy’ recently surfaced in a press release for a company that I’ve been following closely for more than a year.

It should be preemptively noted that the idea of free economy is different than that of a ‘free market’ in which no regulation, subsidization, single monetary system, or governmental monopolization exist (think barter and trade). The idea of free economy is an easily misconstrued one that speaks to the capitalized benefits or distractions introduced, and taken advantage of, during the course of a percentage of consumer experiences with a monetarily free product or service.

This idea has been exorcised without a name for ages — but as we know and as is important in our corporate analysis as investors — with a name, all things in our culture tend to become more popular as they are more easily referenced and recognized. Now that the ‘Open Source’ community has exploded over the last decade, along with software patent protests and plenty else, a massive industry has been born from the idea of free economy. In these models, software is usually offered free of charge, and the company accepts payment for support services or additional software features that might be more tailored to enterprise utilization; thus, they target the guys with money in their pockets.

Recently, I got an idea started for a new company of mine that will greatly utilize, but well balance, the idea of free economy. In this business, I will utilize a key service, which I offer to consumers without charge, to keep consumers and past customers on, and coming back to, the retail website on a regular basis. This provides many benefits for the company and as such is much more than worth the cost of upkeep for the free service.

In any case, it does make you wonder where a world populated by free economy will end up. If everyone offers a free product or service to attract more uptake for their paid product or service, how long will it be before crossover begins to rear its head on a massive scale? For instance, if I offer free use of inventory tracking software with the hopes of getting the consumer to purchase my physical inventory bar-code tags, but someone else is offering a free system to help print your own inventory bar-code tags while wanting you to purchase their inventory tracking software, why wouldn’t I just grab the best of both worlds for free.

Such an act would hurt both business models. While support is one service offering that’s difficult to overlap, there are valid instances in which this crossover could do some serious damage to hard-hitting business models.

Supposedly, there are also some good books on free economy. The one recommended in the eDoorways press release I mentioned earlier is called “Free: The Future of a Radical Price“. While I haven’t read it yet, I certainly intend to. Perhaps Mr. Anderson has some answers for me.

In any case, if free economy is our future, how can I — as a consumer, myself — really complain? Does it inch us closer to a truer idea of a free market or does it inch us closer to communism? Is it better or worse? Even if support becomes free, only as a matter of necessity, wouldn’t it be interesting to exist in such a system? Where would that leave business in general, and where would it leave our race?

With such deep questions, I imagine you can see the root of my desire to get my hands on that book, but for now, free economy is what it is. It will take its toll on business, and it will provide opportunity for business as it is doing for eDoorways, as it will do for the company that I’m working to build, and as it has done for many companies in the last decade.

Thankfully, no matter how unknown the future is, being armed with these new ideas will help us to make more informed decisions, regarding potential investment opportunities, when presented with the term free economy, and we will be better able to understand the cause, caution, and opportunity behind a price of “free”.

~A