The opportunity cost of free

A good with a price of zero is not a good without a cost. Economists have said this so often that it has become a slogan, but the mechanism is worth spelling out, because it explains a lot of behavior around free software, free content, and free services.

Three places the cost goes

1. Time. If the good is scarce and the price is zero, it is rationed by queueing. Free clinics have waiting rooms. Free tiers have rate limits.
2. Attention. Advertising-funded goods are priced in attention. The user is not the customer, and the incentives of the seller point at whoever is.
3. Lock-in. A free good can be a loss leader for a paid one, or a way to raise the switching cost of leaving. The price is paid later and by a different mechanism.

The useful version of the slogan

“There is no free lunch” is a bad heuristic if it makes you refuse free lunches. The better version is a question: who is paying, and what do they expect in return? When the answer is “a foundation that wants the standard to exist” the deal is usually fine. When the answer is unclear, the cost is probably you.