There are four strands of argument here: a technological claim (digital infrastructure is effectively Free), a psychological claim (consumers love Free), a procedural claim (Free means never having to make a judgment), and a commercial claim (the market created by the technological Free and the psychological Free can make you a lot of money). The only problem is that in the middle of laying out what he sees as the new business model of the digital age Anderson is forced to admit that one of his main case studies, YouTube, "has so far failed to make any money for Google."
Why is that? Because of the very principles of Free that Anderson so energetically celebrates. When you let people upload and download as many videos as they want, lots of them will take you up on the offer. That's the magic of Free psychology: an estimated seventy-five billion videos will be served up by YouTube this year. Although the magic of Free technology means that the cost of serving up each video is "close enough to free to round down," "close enough to free" multiplied by seventy-five billion is still a very large number. A recent report by Credit Suisse estimates that YouTube's bandwidth costs in 2009 will be three hundred and sixty million dollars. In the case of YouTube, the effects of technological Free and psychological Free work against each other.
Overall, I'll give this round to Gladwell. He definitely sees the weaknesses in Anderson's arguments and is able to pick them apart fairly easily. He can easily distinguish between a case of real abundance and a case of fake abundance -- in other words, the appearance of abundance is only superficial.
The weakness, of course, is more due to Anderson's overweaning hypiness and guruhood than anything else. He wants to make his ideas on business models based on free digital content some sort of Grand Unification Theory of markets, digital and otherwise rather than honing in on cases where it actually makes sense. He has to shoe horn everything into his model.
And don't get me wrong, I think Anderson's ideas on how abundance of digital materials will transform markets, particularly for cultural production where the products have some of the aspects of commodities: most text, news, popular music. I just don't think Anderson's ideas generalize to everything: if I want to watch a good action movie, I'll probably have to pay to cover very high production costs. If I want to read a good novel, I'll probably have to make sure some of my cash gets to the author.
In the end, I think Free will be a very important book, not because he's right on every point because I doubt it will be. Rather it will be important for moving forward a conversation about business models for cultural expression that needs to happen. And I think he'll be right on enough that it's worth paying attention to.