Book Reviews

Michael Kende. The flip side of free: understanding the economics of the Internet Cambridge, MA: MIT Press, 2021. 259 p. ISBN 9780262045650. $29.95

This is a second book on the economy of the Internet and its peculiarities that I am reviewing this year. This one has another take on economics than the book by Tim Jordan and explores the business models that allow the free use of internet technology, including software, contents, or services.

Michael Kende has all the credentials to investigate the economics of modern information society and especially, Internet economics. He has a PhD in economics from the MIT, has worked as a chief economist of the Internet Society and at present has a range of roles in higher education and consultancy requiring high level of expertise. This long experience and advanced competence is visible in the text that I have just read.

The author investigates the present state of the economics and business models applied on the internet by a variety of actors, from individuals to national governments and almost everything in between. All results of this study are arranged in three bigger parts: the first explains why, on the whole, the prices of digital services on the Internet are free or flat. The second explores the reasons that allow commercial and other actors to offer these free or almost free services, in other words what the free lunch actually costs. The third part outlines the future directions to solve the problems caused by the existing business models and to move ahead. Here comes a more expanded overview of all three parts.

The first part of the book The upside of free looks into the ways of the Internet development and its nature as the infrastructure and technology that was developed in a particular way historically. The standards of the Internet have been set as open standards to 'accomodate inputs from anyone and outputs for all to use' (p. 34) as it was the most beneficial model to allow innovation by all. The open source software has taken roots in these open standards. The services of various kinds, such as providing broadband or wireless connections, have also emerged in a specific environments that required setting up particular competition patterns and pricing models. This has led to the spread of free internet and required to find new ways of earning profit for the businesses as providers of search services or online content.

The second part of the book deals with The downside of free and explains how the privacy and personal data has become the basic currency that we pay online most often. The explanation of the paradoxes of trust and privacy are discussed thoroughly showing the behavioural economics as a highly complicated entanglement of human thoughts, emotions and acts. On the other hand, the author investigates the Internet as an example of a public good and introduces the issues of cybersecurity in governing and protecting the data as a market failure. The power of the platforms to harness huge amount of data is also affecting healthy development of competition that is one of a range of unintended consequences. I thought that chapter 8 in this part on The digital divide is particularly interesting as it draws attention to the problems not only of challenges of access to digital technologies in different parts of the world, but also to a skewed online world view that is a result of these inequalities.

The third and the shortest part is on The future of free. In this part, the author examines the efforts to find solutions to the emerging problems of big data, market power, privacy and data security, and underscores the principles that the needed changes should follow.

The book is written in simple language with very vivid examples. It takes a historical view of the developments of and on the Internet and paints a wide picture of actors involved in the economy of internet. The possibilities opened up by the accumulation of large quantities of data can be beneficial to all, i.e., used for the public good, not for enrichement of the few. The author sees the future in optimistic terms, not only because of the way the Internet has developed, but also because of the attempts carried on at present that seem to suggest this type of developments, such as, data sharing and data commons approach and the efforts to close digital divide globally.

The way the book is written and the complex issues of digital economics are framed will attract to it the general public interested in the development of our digital economics and life. It is not only easy to read, but introduces a clear position of the author and is quite witty at times. It will also be useful for the researchers of modern economics and students of digital communication and information disciplines.

Elena Maceviciute

University of Borås
November, 2021

How to cite this review

Information Research is published four times a year by the University of Borås, Allégatan 1, 501 90 Borås, Sweden.