“In the middle of laying out what he sees as the new business model of the digital age Anderson is forced to admit that one of his main case studies, YouTube, ‘has so far failed to make any money for Google.’ … Why is that? Because of the very principles of Free that Anderson so energetically celebrates.
“When you let people upload and download as many videos as they want, lots of them will take you up on the offer. That’s the magic of Free psychology: an estimated seventy-five billion videos will be served up by YouTube this year. Although the magic of Free technology means that the cost of serving up each video is ‘close enough to free to round down,’ ‘close enough to free’ multiplied by seventy-five billion is still a very large number. … Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds.”
From the New Yorker review of Chris Anderson’s new book, Free — a précis of which ran as a long article in WIRED sixteen months ago, and portions of which incidentally appear to “freely” appropriate chunks of Wikipedia. In the (very entertaining) review, Gladwell minutely deconstructs Anderson’s thesis, and offers a bursting handful of counterexamples to his principal claims.