transcyberia.info

Chris Anderson is a smart guy, but his Wired article on the zero dollar economy has some major flaws.

• Convoluting the fixed costs of filling a server rack, with the marginal cost of serving additional customers, with economies of scale, is rather confusing. The fact that serving an extra customer is free, does nothing to explain how you'll reach return on investment and pay for depreciation. Nor does scaling, which does explain a tendency to monopolization, but that isn't mentioned.
• Narrowing externalities down to the non-monetary values of reputation and attention is rather unhelpful. There's enough monetary externalities that merit attention. Network effects, anyone?
• A glaring deficiency is any treatment of transaction costs. It's transaction costs diving to zero, far more than marginal costs diving to zero, that powers the surge in networked business today. The two are highly complementary.