Pay vs. Free? How do you communicate?

I recently ran across a video by a group called building43, a budding online information community. In the video, blogosphere guru, venture capitalist, and snappy dresser Guy Kawasaki, asks an awesomely diverse panel, among other things, what they do/don't will/won't pay for in terms of technological communication. Their answers at times were equally diverse, but there was a common theme of not wanting to pay much for anything. I'm oversimplifying a bit, but you can watch the whole video here.

Now, Kawasaki has sort of made his mark as a venture capitalist, so he's interested - at least in part - in effective strategies for making money. Again, I'm oversimplifying because Kawasaki has done plenty of great and altruistic things for social media. That's relevant because he laughs (politely) quite a bit when most of his panel members say they wouldn't pay (or wouldn't pay much) for this online service or that online service. I think he laughs partially because their unwillingness to pay seems to contradict their dependencies on existing services, and I am very interested in the paradox that illustrates - more on that below.

I came across the video from an American Express (yeah, that one) blog, of sorts, called OpenForum. Kawasaki wrote a short post there (click here to read it), in which he paraphrases Wired Editor-in-Chief Chris Anderson made two points that interested me a lot:

• Digital economics has created a deflationary economy in which there is near zero marginal costs for distribution. Hence, content is getting cheaper and approaching free.
• Today’s generation expects things for free because people have internalized these digital economics. Adults, by contrast, grew up believing that “free” is a gimmick—i.e. “There’s no such thing as a free lunch.”

Put another way, tech-users of my generation (and older, if you can believe they exist) have been taught that free means "dangerous." However, younger users of communications technology have been raised to expect free (or really, really cheap) technology, so companies who offer those technologies have had to drop their prices again and again just to keep their products in use.

Sidebar: In an article this summer, Anderson points out that "the Neiman Marcus catalog offered the first home PC, a stylish stand-up model called the Honeywell Kitchen Computer, priced at $10,600." Think about where those prices are
today.

Are Kawasaki and Anderson right? In terms of communications technologies (email? cell-phone? cable TV? GPS? etc.), what do you pay for? What don't you pay for? If one of your "free" service providers started charging, what - if anything - would you pay for? Most importantly, why/why not?