Unlocking the Power of 'Free Economics': How Free Stuff Shapes Our World

Free economics - In a market economy, investment, production, and distribution to consumers are determined by the price signals generated through the interaction of supply and demand forces.

Hey there, welcome to the first post from YouthInEcon. We are going to dive into a fascinating concept that will change the way we think about money and business. Welcome to the world of Free Economics! 

So, what is Free Economics?

Imagine using a free app, watching free YouTube videos, or using social media without paying a dime. That's Free Economics at work! It's an economic model where companies offer you stuff for free, but they're not being charitable. Nope, they're playing a smart game that generates a lot more money than you think they do.

The Freemium Game

One of the most common Freeconomics models being applied is the "freemium" model.  The “freemium” model is a business model in which a company offers basic or limited features to users at no cost and then charges a premium for supplemental or advanced features. Think of mobile games where you can play for free but can buy special items.  Also, think of your go-to music streaming app, you can usually listen to a limited amount of songs, however, if you want to listen to more songs, you are required to pay the ‘premium’ plan.  This model will often ‘trick’ users into buying the premium version, by first giving them a trial of the services or products they offer. 

Ads, Ads, and More Ads

Ever wonder why there are ads all over your favorite websites and apps? That's because these companies are making money from advertisers who want to reach you. Metaphorically, You're the star, and the ads are the supporting actors that keep the show running. As more and more brands are trying to reach you, they will try to use every platform to advertise their item.  This method is much more effective than you think it is.  Although you might think that ‘Ads aren’t going to impact me’, however, the next time you go to a convenience store, take the time to realize how much Ads have made you more familiar with the products around you.

Data is the New Gold

This might sound a bit exaggerated, but your data is super valuable. Companies like Facebook and Google give you free services, but they collect data about you to show you ads that you might like. Your info helps them make money.  That is why they constantly strive to provide you with the best service possible. With your increasing reliance on them, they can harvest more and more of your data and use it to feed you more personalized ads, news, and even search recommendations. That's the data-driven side of Free Economics.

The Power of Network Effects

Ever heard of "the more, the merrier"? That's what's happening in Freeconomics when a product or service gets better as more people use it. It's like having more friends on a social media platform, making it more fun and useful. Companies want as many people as possible to join the party.  That is what’s currently happening with independent social media platforms on the market, such as BeReal, Snapchat, and Discord.  Although it is detached from big companies such as Microsoft, Google, and Meta, however, as long as there are still enough users using it, they can still strive as a social media.  The problems arise when the platform is no longer relevant, which can easily bring the platform to freefall.

Open Source and Crowdsourcing

Some Freeconomics folks are all about sharing and teamwork. They create open-source software, which means anyone can use and improve it for free. And then there's crowdsourcing, where lots of people chip in to create something valuable, like Wikipedia.  A lot of blog pages such as Reddit and Quora are also an example of this.  The upside to this is it is publicly run, therefore people can help out each other voluntarily.  However, the majority of people who utilize this are the ones looking for help, which can be a problem when people stop helping each other out.

What's the Catch?

While Free Economics can be awesome, it's not all positive. Companies need to make money somehow, right? So, they might use your data or show you ads. Plus, they might tempt you with premium features or merchandise to get you to open your wallet.

Why Should You Care?

Free Economics is all around us, shaping the digital world we live in. Understanding how it works can help you make smart choices as a consumer and maybe even inspire your entrepreneurial ideas.

So, there you have it, a sneak peek into the world of Free Economics. Next time you're scrolling through social media or playing a free game on your phone, remember that there's more going on behind the scenes than meets the eye. It's all part of the magical world where "free" isn't always what it seems, but it sure is fun to explore!