Moejoe: I partially agree, in that there will be tremendous pricing pressure on digital goods, including expectations that "digital costs nothing, and should therefore be free."
The problem is that in the cases where costs -- however small -- are higher than the ad revenues that can be generated, the "Free" model is not sustainable and the inevitably new products cannot be produced. For example, it is plausible that you could set up a free distribution network for feature-length films, using digital files and Bittorrent or a similar P2P network. However, distribution is only one component of the cost; making the movie itself can still cost millions of dollars. If no one is willing to pay for a movie in any form, who could afford to actually make a new one?
Or, look at Facebook. It might appear to be "free," in that all of the content is essentially generated by its users. Presumably Anderson would assume that Facebook costs "nothing" to run, but this is far from the case; costs include bandwidth, hardware expansion and maintenance, software development and maintenance, management, debt service and so forth. Facebook has a massive audience and is growing exponentially -- but is still losing money, and costs increase as its user base expands. Nor could these costs be reduced by moving to some type of distributed or P2P model.
Now, it's entirely plausible that Facebook will develop a sustainable free model. But it is erroneous to assume that the site costs "nothing" to run because the content is generated at no cost.
Nor should we necessarily assume that users would never, ever join something like Facebook if there was a charge... because they already do pay for services like Second Life, WoW, Lineage and so forth. (Users even trade real currency for virtual goods, services and currencies!)
There are also hidden costs and issues with an uncontrolled (and uncontrollable) distribution network. There's no quality control; minimal ability to market a specific item; no guarantee that a specific item will be available; reduced ability to track downloads; and no one to contact with technical issues -- but still someone to blame (the publisher).
Keep in mind that the "Free" model is not exactly new, either; for example, it's how broadcast television has worked for decades. Revenues were good enough to even support expensive productions. Ironically, these bastions of Free are increasingly threatened and unsustainable -- in no small part because the competing low-cost distribution networks do not generate comparable advertising fees.
Distribution is only part of the costs. As such, the "inherent value" of a digital good is
not zero just because one aspect of the production costs falls.
P.S. it actually took Kerouac far more than a weekend to write
On the Road - about 9 years to finalize it.
