Chris Anderson, editor of Wired and author of "The Long Tail," has a new article in Wired titled "Free! Why $0.00 Is the Future of Business." (Is "The Long Tail" already outdated? Two years ago the future of digital business was selling more of less. Now its future is giving away items for free. His next article should combine the two and try to explain how free can work with the paid models described in "The Long Tail." This article does not merge into a meaningful way for industries such as music or entertainment. There are only a few anecdotes thrown in to prove his point.)

Yes, Anderson has most certainly downed the Radiohead-Reznor Kool-Aid, but he's right on.

The rise of "freeconomics" is being driven by the underlying technologies that power the Web. Just as Moore's law dictates that a unit of processing power halves in price every 18 months, the price of bandwidth and storage is dropping even faster. Which is to say, the trend lines that determine the cost of doing business online all point the same way: to zero.

Before the Zero Marginal Cost Militia repeats its call for all music be priced at zero, let's think about the free model. Not all music is going to be free -- as in free MP3 downloads -- but free music can increase awareness, build relationships and encourage sales (or other revenue streams).

From the consumer's perspective, though, 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, one of clawing and scratching for every customer. The psychology of "free" is powerful indeed, as any marketer will tell you. ... The huge psychological gap between "almost zero" and "zero" is why micropayments failed. It's why Google doesn't show up on your credit card. It's why modern Web companies don't charge their users anything. And it's why Yahoo gives away disk drive space. The question of infinite storage was not if but when. The winners made their stuff free first.

last.fm, for example, has free streaming from all four majors and a gaggle of indies. MySpace is rumored to be working on an ad-supported music portal -- it would presumably have free streams but could include paid downloads as well. Promotions such as PepsiStuff give away "free" downloads that were underwritten by Pepsi purchases. Lala.com's model was built upon the premise that free streaming music would be supported by revenue from downloads and CD sales. Free can work.

(Anderson stumbled, though, when he brought up the unrealistic expectation that free CDs and downloads can lead to more ticket sales. It's not a universal model since not all artists can or will perform live. He's going to dangerously raise expectations with that kind of talk.)

He ended with the idea that today's youth don't just want free, they expect free.

It took decades to shake off the assumption that computing was supposed to be rationed for the few, and we're only now starting to liberate bandwidth and storage from the same poverty of imagination. But a generation raised on the free Web is coming of age, and they will find entirely new ways to embrace waste, transforming the world in the process. Because free is what you want — and free, increasingly, is what you're going to get.

No doubt about it.