I keep beating this horse, so I'll beat it more:

The same thing is happening to the digital world that happened to classical media.

People want cheap and/or free. It's also incredibly difficult to compete with cheap/free products. Mix this with the fact that information is "free" -- it costs almost nothing to copy -- and all information economies tend to become deflationary races to the bottom dominated by free and freemium stuff that is indirectly funded by other parties (like advertisers).

What's wrong with this? I mean, doesn't this mean the information economy is some kind of wonderful post-scarcity utopia?

The problem is that information isn't actually free.

Let's say you have two files. One is 100k and contains a copy of a novel. The other is 100k and contains the results if dd if=/dev/urandom. Both files take up the same amount of space and both are virtually free to copy and distribute. But the novel took years and years of someone's hard work to create, while the random numbers took no effort at all outside of a tiny bit of electricity.

All information is not created equal. Information that requires effort to produce is not the same as information that doesn't.

This creates a market paradox. The market wants free (or at least cheap), and free is incredibly tempting to marketers because free undercuts the competition and goes viral. With free (or freemium) you can get a kind of exponential growth curve that is incredibly hard to achieve with a paid product. Yet at the same time you are a liar. The information you're releasing for free is not free. It cost you something to produce. Like all lies, at some point you have to answer for this one. How will you keep the ball rolling?

In a networked world, the obvious and convenient answer is to sell your users to someone else.

In cases where your product has a service component with a non-trivial cost (e.g. Facebook), free is a particularly pernicious lie. Not only does it cost money to keep producing the product, but it also costs hard capital to operate the infrastructure. If there's no subscription based revenue model, you must sell out your users. Either that or you shut down.

This happened in traditional media of course, and it gave us ad-or-propaganda-fueled television and radio. Outside of a few pay channels, virtually all broadcast media is financed by advertisers or is operated at a loss by governments to serve as a propaganda outlet (the same thing really).

This means that -- big surprise -- those financiers have tremendous pull over what is broadcast. There's a reason you never see genuine challenges to the conventional corporatist/state-capitalist political system on TV. It's because the beneficiaries of that system pay for all your TV.

There are exceptions in the software world, like Linux, that have managed to discover a niche where they can be the permanent beneficiaries of philanthropy. These exist in the broadcast world too. But they're unicorns. These niches are rare, hard to construct, and possibly unstable. Ultimately every business and most other efforts that require constant financing must serve some master. If free rules the day, they must serve advertisers and other interests that want to buy you.

It's no coincidence that Apple is trying to take the high road. They're doing it because they can. Apple is insanely profitable off their own physical products and their own vertically integrated services, and they have a measure of lock-in that ensures long term customer loyalty (meaning high lifetime customer value). They can afford to forego advertising revenue in favor of customer goodwill, especially since this further cements their lock-in over those customers in the long term via platform integration.

When I saw that Windows 10 was going to be free, I knew it would be spyware. Microsoft also has the option of taking the high road, but they've chosen not to. Instead they've decided to try to become Google or Facebook and "invert their model," making their products free and therefore making their users into products.

The free ad-supported model was tolerable for TV and radio because these are unidirectional. The TV does not watch you. But free ad-supported models in the Internet age lead to horrific dystopias. If we don't want something worse than Orwell's worst nightmares, I really think the only solution is to reject free.

Rejecting free alone is not enough -- obviously there are paid products that are user-hostile. But I think it's at least a necessary if not sufficient condition. We also have to embrace and reward players that make an effort to protect their customers' privacy and security -- in other words to treat their paying customer like customers.

I'm looking forward to the day when customers see "free" and actively reject the product, assuming that its business model will be user-hostile. I already see a little bit of this in the web. When free services with absolutely no revenue model get introduced, I often see skeptical questions about where the money's going to come from. If the company has no obvious answer, the default is 'by selling you out.'