"Free" vs. Peak Oil

I haven't read Chris Anderson's new book "Free: The Future of a Radical Price," but I've been following the debate over Malcolm Gladwell's New Yorker review and Anderson's response. Gladwell summarizes Anderson's basic argument as: The digital age is exerting inexorable downward pressure on the prices of all things "made of ideas." This revelation is not unique to Anderson. I mean, hey, it's 6:30 am and I'm blogging for free about articles I read for free for you who will read it for free and meanwhile, my "free" gmail account is trying to sell me a "Didgeridoo for Sleep Apnea."

But underlying this copious pile of free is a steady stream of electrons that keeps our eyes and ears hooked into the ideas beaming out of our computers, TV's, stereos, and twitter-enabled smart phones. Between 2000 and 2005 according to this pdf report by Jonathan Koomey, the amount of electricity used by servers alone doubled to account for 14 power plants world wide and $7.2 billion dollars. Is there some tension between free ideas and limited energy and natural resources?  Are free ideas and Peak Oil compatible? Or do they have some strange synergy? I think so, but the unified theory of it all remains to be thought, so I'm throwing it out to you, readers. Respond freely.

The low cost of energy has underwritten much of what we accept as reality. Free shipping for buying an extra book on Amazon is a case in point. But so is the bargain price of goods made in China with subsidized fuel and cheap container transport. And so are suburban McMansions, enabled by mortgages that didn't take the cost of power into account. Long commutes in big cars were enabled by cheap gas, which seemed inconsequential until it topped $2 a gallon (and then $3 and then $4.)  In the US, energy is a "right" as much as an expense, which changes its psychological price, at least.

Anderson (as quoted by Gladwell) says "From the consumer's perspective, there is a huge difference between cheap and free. Give a product away, and it can go viral. Charge a single cent for it and you're in an entirely different business.... The truth is that zero is one market and any other price is another."

So what happens as the economy of free, with its viral geometric expansions, hits the economy of not-quite-free-and-increasingly-scarce energy? It seems to me that the price of energy will increase and somewhere along the way it will loop back and start either choking the flow of these free ideas, or putting a new price on them. But in the case of oil, the price of the resource itself is determined in the sphere of necessarily free ideas and information. Because much of the information about the world oil market is open and freely available, multiple participants in the market can price the product and transfer "free" news of its price frictionlessly around the world. As the resource rises in price, and the value of news falls, there will be two tiers of information about it--free and pricey. Will the market still work if the free information becomes worthless?

And what about not-free CO2? We are at one of those watershed moments in history where we plan to reverse a million years of free CO2 emissions and start charging for something that looks like, and is, air. The grand hope is that charging for carbon will create new economies that care about limiting CO2 emissions. But limiting those emissions will require huge knowledge economies, and a lot of information, both of which need to be sustained through money. Free might not work for us there.

Obviously, this is a disorderly smorgasbord of a reaction to a book I haven't read, and I welcome your thoughts and reactions. But I have one basic reaction to the concept of "free" ideas, and that is that probably, somebody, somewhere is paying. A massive shift in technology, behavior, and pricing finds me sitting here this morning snickering at didgeridoo ads and creating free blog posts, but somewhere, a real economy of money, resources, and carbon is piling up. Somewhere, someone is mining coal, someone else is cursing the coal trucks that roll past her house every few minutes, somebody's having an asthma attack from the combo of emissions and ozone required to produce the electricity that's powering my computer and yours. And meanwhile, somebody else is looking at his sheep on the edge of the Sahel and wondering where they're going to go when the grass finally dries up. Free may be another name for a high price that's spread very far and very thin.