Kevin Kelly has a fantastic (no surprise) riff about free. Highly recommended.

His point: when there are infinite copies of something, charging for one is almost impossible.

Here are his eight ways of making something worth charging for:

Immediacy — Sooner or later you can
find a free copy of whatever you want, but getting a copy delivered to
your inbox the moment it is released — or even better, produced — by
its creators is a generative asset. Many people go to movie theaters to
see films on the opening night, where they will pay a hefty price to
see a film that later will be available for free, or almost free, via
rental or download. Hardcover books command a premium for their
immediacy, disguised as a harder cover. First in line often commands an
extra price for the same good. As a sellable quality, immediacy has
many levels, including access to beta versions. Fans are brought into
the generative process itself. Beta versions are often de-valued
because they are incomplete, but they also possess generative qualities
that can be sold. Immediacy is a relative term, which is why it is
generative. It has to fit with the product and the audience. A blog has
a different sense of time than a movie, or a car. But immediacy can be
found in any media.

Personalization — A generic version of a concert
recording may be free, but if you want a copy that has been tweaked to
sound perfect in your particular living room — as if it were preformed
in your room — you may be willing to pay a lot.  The free copy of a
book can be custom edited by the publishers to reflect your own
previous reading background. A free movie you buy may be cut to reflect
the rating you desire (no violence, dirty language okay). Aspirin is
free, but aspirin tailored to your DNA is very expensive. As many have
noted, personalization requires an ongoing conversation between the
creator and consumer, artist and fan, producer and user. It is deeply
generative because it is iterative and time consuming. You can’t copy
the personalization that a relationship represents. Marketers call that
"stickiness" because it means both sides of the relationship are stuck
(invested) in this generative asset, and will be reluctant to switch
and start over.

Interpretation — As the old joke goes: software,
free. The manual, $10,000. But it’s no joke. A couple of high profile
companies, like Red Hat, Apache, and others make their living doing
exactly that. They provide paid support for free software. The copy of
code, being mere bits, is free — and becomes valuable to you only
through the support and guidance. I suspect a lot of genetic
information will go this route. Right now getting your copy of your DNA
is very expensive, but soon it won’t be. In fact, soon pharmaceutical
companies will PAY you to get your genes sequence. So the copy of your
sequence will be free, but the interpretation of what it means, what
you can do about it, and how to use it — the manual for your genes so
to speak — will be expensive.

Authenticity — You might be able to grab a key
software application for free, but even if you don’t need a manual, you
might like to be sure it is bug free, reliable, and warranted. You’ll
pay for authenticity. There are nearly an infinite number of variations
of the Grateful Dead jams around; buying an authentic version from the
band itself will ensure you get the one you wanted. Or that it was
indeed actually performed by the Dead. Artists have dealt with this
problem for a long time. Graphic reproductions such as photographs and
lithographs often come with the artist’s stamp of authenticity — a
signature — to raise the price of the copy. Digital watermarks and
other signature technology will not work as copy-protection schemes
(copies are super-conducting liquids, remember?) but they can serve up
the generative quality of authenticity for those who care.

Accessibility — Ownership often sucks. You have to
keep your things tidy, up-to-date, and in the case of digital material,
backed up. And in this mobile world, you have to carry it along with
you. Many people, me included, will be happy to have others tend our
"possessions" by subscribing to them. We’ll pay Acme Digital Warehouse
to serve us any musical tune in the world, when and where we want it,
as well as any movie, photo (ours or other photographers). Ditto for
books and blogs.  Acme backs everything up, pays the creators, and
delivers us our desires. We can sip it from our phones, PDAs, laptops,
big screens from where-ever. The fact that most of this material will
be available free, if we want to tend it, back it up, keep adding to
it, and organize it, will be less and less appealing as time goes on.

Embodiment — At its core the digital copy is without
a body. You can take a free copy of a work and throw it on a screen.
But perhaps you’d like to see it in hi-res on a huge screen? Maybe in
3D? PDFs are fine, but sometimes it is delicious to have the same words
printed on bright white cottony paper, bound in leather. Feels so good.
What about dwelling in your favorite (free) game with 35 others in the
same room? There is no end to greater embodiment. Sure, the hi-res of
today — which may draw ticket holders to a big theater — may migrate
to your home theater tomorrow, but there will always be new insanely
great display technology that consumers won’t have. Laser projection,
holographic display, the holodeck itself! And nothing gets embodied as
much as music in a live performance, with real bodies. The music is
free; the bodily performance expensive. This formula is quickly
becoming a common one for not only musicians, but even authors. The
book is free; the bodily talk is expensive.

Patronage — It is my belief that audiences WANT to
pay creators. Fans like to reward artists, musicians, authors and the
like with the tokens of their appreciation, because it allows them to
connect. But they will only pay if it is very easy to do, a reasonable
amount, and they feel certain the money will directly benefit the
creators. Radiohead’s recent high-profile experiment in letting fans
pay them whatever they wished for a free copy is an excellent
illustration of the power of patronage. The elusive, intangible
connection that flows between appreciative fans and the artist is worth
something. In Radiohead’s case it was about $5 per download. There are
many other examples of the audience paying simply because it feels
good.

Findability — Where as the previous generative
qualities reside within creative digital works, findability is an asset
that occurs at a higher level in the aggregate of many works. A zero
price does not help direct attention to a work, and in fact may
sometimes hinder it. But no matter what its price, a work has no value
unless it is seen; unfound masterpieces are worthless. When there are
millions of books, millions of songs, millions of films, millions of
applications, millions of everything requesting our attention — and
most of it free — being found is valuable. 

The giant aggregators such as Amazon and Netflix make their living in
part by helping the audience find works they love. They bring out the
good news of the "long tail" phenomenon, which we all know, connects
niche audiences with niche productions. But sadly, the long tail is
only good news for the giant aggregators, and larger mid-level
aggregators such as publishers, studios, and labels. The "long tail" is
only lukewarm news to creators themselves. But since findability can
really only happen at the systems level, creators need aggregators.
This is why publishers, studios, and labels (PSL)will never disappear.
They are not needed for distribution of the copies (the internet
machine does that). Rather the PSL are needed for the distribution of
the users’ attention back to the works. From an ocean of possibilities
the PSL find, nurture and refine the work of creators that they believe
fans will connect with. Other intermediates such as critics and
reviewers also channel attention. Fans rely on this multi-level
apparatus of findability to discover the works of worth out of the
zillions produced. There is money to be made (indirectly for the
creatives) by finding talent. For many years the paper publication TV
Guide made more money than all of the 3 major TV networks it "guided"
combined. The magazine guided and pointed viewers to the good stuff on
the tube that week. Stuff, it is worth noting, that was free to the
viewers.  There is little doubt that besides the mega-aggregators, in
the world of the free many PDLs will make money selling findability —
in addition to the other generative qualities.