Cost to produce to zero

When would you want to live? Not just for a year, forever.

In 1940, 45% of American homes had no indoor plumbing. No toilet inside the house. You walked outside to an outhouse, summer or winter. Today we consider this so basic that imagining otherwise feels absurd. But your grandparents probably grew up this way.

It’s easy to focus on the flow of negative short term news in the world. But the present is better by almost every measure. And the future will be better still.

Now consider what happens to production .

In 2008, sending a text message cost 15 cents. Then WhatsApp arrived. By February 2014, it was handling 64 billion messages per day with just 50 employees, a.k.a double the global SMS volume. The telecom industry lost $386 billion between 2012 and 2018.

The same thing happened with international calls. In 1927, a transatlantic call cost $25 per minute, about $469 in today’s money. By 2006, the FCC stopped tracking the price, it had become too low to matter.

What happened? Cost to produce hits zero. No one can charge what someone else can provide for free.

Now AI is doing the same thing to intellectual work. What cost a consulting team yesterday costs a single person with Claude Code today. Writing, analysis, coding, design, research: the marginal cost will soon approach zero. And this shift is distributed, anyone can access it for free.

But AI doesn’t stop at intellectual work.

Jensen Huang calls this moment “the ChatGPT moment for physical AI.” Once reasoning costs nothing, robotics follows. And once robots can marginally manufacture for free, physical production costs will approach zero too.

Stripe tracks on their homepage how much of global GDP runs on their platform. It’s currently above 1.5%, and they’re working to push it higher. I expect one day an AI company will track global cost to produce the same way. Until, like international calls, it becomes too low to matter.

What becomes free when cost to produce goes to zero? Well everything. Clothes. Food. Healthcare. Not “survival-level” free. This sounds utopian but it’s what happened with every technology that dropped costs. It just happens that we forgot what the world was before and we contempt software.

The only thing that will still cost you will probably be land. You want to buy enough space in Paris for a house with a garden, there no tech that can help you.

So how does anyone make money?

Fortnite shows an example of answer. The game is free. Completely free. Yet it has generated over $42 billion in lifetime revenue. How? Skins for your character, stylish weapons, funny emotes. All cosmetic. All about self-expression and status.

In the software world, we used to think of games as products you bought in a box. But the internet changed the unit economics. Since the marginal cost of serving one more user is effectively zero, the rational move is to move to Freemium and make the game free to get everyone in the door. You don’t need a thousand people; you need 99% people to play for free so that the 1% (the “whales”) spend $10,000 each. It’s a shift from selling a commodity to selling status.

When a new type of product costs nothing to produce, we keep it free and invent new ways to monetize it.

There is still a catch. Once costs drop to zero, demand will scale exponentially. But resources cannot. We already exceed Earth’s sustainable capacity by 60%. recycling has thermodynamic limits

I don’t know how this resolves. Maybe global coordination, AI-managed resource allocation, maybe we reach near-infinite energy, then cost to space harvesting and transmutation goes to zero too. Who knows, cost to research is going to zero too anyway. Let’s be optimistic.

Cost to produce to zero.