In this report a feature of the Digital Economy is discussed. This is the proliferation of new and free goods and services.
Free goods often have an implicit price. The positive quantity of these goods that are consumed have a zero measured value. There is no observable market price and the System of National Account excludes them entirely from gross domestic procuct (GDP). Free consumer entertainment and information from the internet, largely supported by advertising revenues, has a major impact on consumer behaviour. Some economists believe that gross domestic product growth is underestimated because GDP excludes most online entertainment.
In this paper we deal with the questions: What are free services? How can we categorize or measure it? Are there arguments to include them in the national accounts? Is that even possible? We present a framework to identify free services, the suppliers and users and the business models that are used to produce free services. When these questions are answered and products of free services are identified we investigate whether there is a significant contribution of the free services and whether they significantly affect GDP. This research has been undertaken as part of an Eurostat grant.
