I was reading a post by Fred Wilson the other day titled In defense of free. For you non tech folks that read my blog, Fred Wilson is one of the most influential investors in technology.
As I was reading his post though, I realized that many of the things he views as "free" I simply view as something that you pay for with a currency other than dollars.
But I don't view them as free. I just pay for them in something other than dollars. And sometimes, the payment is way more valuable to the service provider than money.
When you listen to Pandora, you're paying for it with your attention by listening to ads. You pay Facebook by giving them the right to collect your personal information and web usage so they can service their advertisers more effectively. And when you use Twitter you're paying them with your attention so that they can possibly build a revenue model.
In each case, even though you're not paying with money, you are paying with something. I personally would love it if I could pay Facebook a nominal fee and not see any ads, have complete privacy, and not get tracked all over the web. Alas, that's not an option.
Just because something doesn't cost money doesn't mean it's free. So any time you sign up for a "free" service, ask yourself, what am I paying them with.
In every case, you are paying something.