“Practically everything web technology touches starts down the path to gratis,” explains Chris Anderson, editor-in-chief of Wired Magazine and author of an upcoming book detailing why free is the future of business. He notes that when a tangible product can be effectively distributed as an intangible product, we consume it differently. Production costs become less, delivery and storage fees dwindle, and eventually so does market value. Many products once sold for a profit are now free in their digital incarnations: stock quotes, maps, encyclopedias, etc. This trend has already transformed myriad industries, and made others completely obsolete.

Google has anticipated this continuing price depreciation by offering most of their online applications at no cost to consumers. Before Gmail launched in 2004, offering one gigabyte of email storage, competitors like Yahoo offered only four megabytes (256 times less). Three years later, Yahoo has followed the trend and offers “unlimited” email storage. Those who can recognize consumer trends early have the most to benefit. This strategy has been a key factor in establishing Google’s dominance in various online markets. Google uses free products to reach a wider audience, and then leverages this ubiquity to sell advertising space and alternative products.

As the price consumers are willing to pay drops in various online industries, we should anticipate this trend to reach wider audiences.