E-mail postage and the future of pricing

Can there be a good reason for charging for something that is free? Yahoo and AOL are not joking when they are playing with the idea of postage on e-mail (via Smart Mobs blog).

In Wikipedia entry on supply and demand your learn that

The theory of supply and demand describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand).

One increasingly popular, completely normal albeit more unorthodox role for pricing is to use it "backwards" and utilize its ability to cool off demand, even on "free" resources. Road-tolls are e.g used to reduce congestion in many urban areas.

In a world where the transaction and production costs decrease dramatically, usage can sometimes increase exponentially. One major problem is that this may lead to saturation of scarce resources and potentially stop all serious use of that resource.

I predict that price will increasingly be used as a tool for restricting use of free but limited resources. Why do I think this?

  • Flocking and Smart Mobs effects are increasing and will increase the pressure on places and resources dramatically for short periods of time. To restrict and level out these tops different pricing schemes is probably the easiest way.
  • Urbanization will put enormous pressure on existing city structures in the future, and old models of charging an entrance to cities or at least part of cities (like in medieval times?) in one way or the other will probably appear.
  • A lot of digital structures are today looking for more and more eye balls in order to increase their ad revenues. This puts pressure on their infrastructure and administrative capability. When reaching a certain limit we can already see more and more of these successful sites charging for the serious visitors and thus limiting access. Increasingly sites will understand that having 10% of their current visitors who actually are paying to use the resources are in the long run more valuable than the hoards of bypassers - niche business logic will grow (The Long Tail Theory).
  • Spam and other kinds of ads are spreading and is starting to annoy people

E-mail is just one of the areas where you don't want everybody to have access to your inbox, one evidently scarce resource. When individuals see the effect of this in their mailboxes, they will probably be strong supporters of the model. If we have a small fee on each mail message, which we could level out with those we have e-mail conversations with, but those who want to send unsolicited mails to you have to pay a fee. The result: almost NO SPAM!

There are however a number of negative side effects of toll charges.

  • It will probably increase the differences even further between those who are able to pay for entrance and those who are not
  • Areas which require huge number of participants to work as intended will maybe never appear
  • When governments understand that the tremendous power in the global Internet will be a threat to their power, they will use their regulatory power to support these kinds of pricing schemes to "civilize" the use of the net.

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