Let me tell what I did for a few hours today.
I opened up a short story I wrote seven years ago. I used Open Office Writer, a free and very powerful, fully compatible, word-processor to do do my edits. Then I went to Wordpress and registered for a blog page. Then I installed in my free Firefox web browser (I have three actually, Firefox, Opera, and Safari) a tool for converting from “word” files to HTML for blog entries, called ScribeFire. I took my word-processor file, which I had saved in Word 2007 format and and dropped it in Scribefire. Told Scribefire where my blog was and click, done, my blog was posted and it was time to open a nice Cabernet.
Not counting word-processing (i.e., “creative”) time the total operation (installing, registering, cutting and pasting, etc., took less than two hours. Cost - $0.00 unless you count my lost opportunity time, except that I would have done this even if I had to pay for the software.
Is this Web 2.0? Is free the new business model?
I don't know how these sites can afford to do what they are doing. OK, the software development or licensing is not that expensive, but it needs maintenance and bug fixes. And then there are the servers, and sure, hardware costs are dropping, but still there's electricity to be paid for and probably cooling (and that's definitely not dropping.) And some schlub has to keep those blades and cheapo servers running, OS up to date, routers and switchers maintained, etc. That's ops cost and money to pay for it has to come from somewhere.
But they do it, and have done it. Google will give you a fine office suite for free and store all your docs. Why? just so you'll have to look at their customer's ads when you log in to get your free stuff? Have you ever refinanced your house, got a college degree, bought insurance, a new car, or sex enhancement products because you saw an ad while logging in to get your free stuff? So it's a mystery to me how this stuff is paid for. But you know what my grandmother used to tell me? The best way to ruin a miracle is to try and explain it. The corollary to that may be this: any new technology looks like magic to the ignorant.
Everything I've done tonight while writing this has been free except the hardware I've done it on. And let's look at that. An HP mininote netbook - $400 retail. So let's start at the beginning - I invest $400 (which includes a Microsoft OS) and write this, and post it to my blog. That makes me a publisher, and with my free email program I can blast my posting to the world and get more distribution than the largest book chain, newspaper, or magazine - larger than even the TV networks - and I only used about 30 watts of power and it's at night when kw hr are cheap. And it's all free. At least to me.
How in the world are companies like Microsoft, Adobe, Oracle, and Corel going to survive? Why would anyone buy their stuff? OK, HP bought Microsoft's OS or I wouldn't be writing this. But... open Office, Linux, hmmm.