Some interesting chatter on the nature of business models for New Media at Mashable.

The idea of "Free" business models has been gathering pace for some time, and will undoubtedly gather even more as Chris Anderson's book, FREE, is released: you can get the gist of it from this great article. I wonder if the book will be free? Or maybe I'll just have to pay for some of the cooler chapters...

I suppose the takeaways from this right now are:

• The internet is extremely effective at commoditising to zero various capabilities and services you'd have previously expected to pay for (such as video, or more mundane things like bandwidth and storage). You can get all of that for free. More sophisticated offerings are also subject to this commoditisation because of the choice (economics of abundance) for a consumer/user.
• There is a huge psychological gap between nothing and something regardless of how small the something is. Chris identifies this as the cause of failure for micropayments ideas.
• The taxonomy that Chris describes is already beginning to emerge, or is clear and present: "Freemium" services have been around for some time and (to this observer) seem to be growing in presence. Flickr, anything by 37Signals and RememberTheMilk are useful examples.

Staying on the 'someone else is picking up the tab for your free lunch' (the essence of Freemium services) it's worth thinking about who is picking up the tab in the social networking space.

The answer is of course that you are, or at least whoever is contributing into a social networking service is providing the collateral needed by the provider to drive value from the service.

When I pay $25 for Flickr, I (sort of) understand what I'm giving and what I'm getting. It's much less clear what I'm giving (particularly the 'value over time'), and what the repercussions are for other services.

It is not in the interest of these service providers to provide information they have to other services.

In the middle of this is your/our/my data. I'm not sure how comfortable I am with that. Maybe privacy is a generational issue and I'm just getting too old. Perhaps the Freemium offering for social networking sites is that (for $25...) they can guarantee that my information is not shared with advertisers, 3rd party developers or whoever - just my friends ;)

At least it may help to solve this particular conundrum.