Some interesting articles in this months issue of Wired… One in particular that I liked was “Why $0.00 is the future of business” – So I thought I’d recap a little here.

In 2002 Yahoo launched their premium version of its email service, charging $29.99/year for 25mb. Like the law that dictates a unit of processing power halves every 18 months (See Moore’s Law) bandwidth and storage drop even faster. With revenue profits soaring, Google in 2004 introduces Gmail, offering 40 times the storage than Yahoo’s paid service, and it was FREE! In 2007 Yahoo countered by offering unlimited storage, for free. In 2002 the revenue per user was about $.25 and the cost of bandwidth and storage per gigabyte was $2.50 – But only 5 years later the revenue per user had shot to $90 per user, and the cost per gig had dropped to near $.25! With such dramatic changes, you can see how limited email service went from $30 a year, to unlimited service for free. This is the world of internet economics!

Another section in the article talked about Google’s free directory assistance program. AT&T and its competitors earn $7 billion a year from directory assistance alone! So how can Google offer this for free? Let’s take a look…

Each time callers to GOOG-411 request a phone number, they’re giving Google valuable information. Each call provides voice data that Google uses to improve their service. Estimated market value of that data since the service launched last spring: $14 million. Still, the value of that information hardly compares with potential earnings if Google were to charge $1 per call. Why odes this make sense? Because it’s a test bed for voice-driven search engine using mobile phones! If it serves ads to those phones, Google’s share of that market could be measured in billions.

So the potential revenue sacrificed by Google by 2012 based on current estimated call volume is $144 million, but their projected revenue from the North American and European mobile search market by 2012 is $2.5 BILLION.