Ahan Analytics, LLC Thought Blog - Thoughts on making practical use of analytics
Aug
27

Nothing is free in an exchange-based economy

written by Dr. Duru

Barbara Kahn, Dean of the School of Business Administration at the University of Miami, appeared on Nightly Business Report August 25, 2009 to comment on the new book “Free: The Future of a Radical Price” by Chris Anderson. Kahn rightly points out that even when consumers seem to be getting goods and services for free, they are actually exchanging something other than money that can be just as valuable like “…their time, loyalty or trust.” Kahn notes that “Free television isn’t free; it costs your time and attention and that’s valuable to advertisers. Facebook users invest their network of friends, which ties them to a system and that is valuable.”

In these examples the consumer is not paying money, but the companies providing the “free” services are leveraging the consumer’s contribution to generate revenues and profits from other sources, primarily advertising. We live in an economy based on exchange and very rarely is only one party the sole contributor to that exchange.

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