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Of course, you can compete with free, by offering something better. People still go to theaters despite being able to get movies for free, because the experience is better (sometimes). People still pay for things all the time when there are free or cheaper options. If you can truly differentiate a scarce good, you can always "compete" with free. Where you can't compete is when you're offering an identical commodity good that's free... On the second two points, I agree, but it feels like a little more detail and data would have made the argument much, much stronger.
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