Absolutely no Net profits

Log on to the Internet, and look for a file: a new spreadsheet or calendar perhaps, or even a copy of Wuthering Heights. Then download it into your computer via your modem, and use it. The process will have taken a few pence out of your phone bill or, if you're using a "Free-Net", nothing at all. No licences to pay, no expensive upgrades or overdue book fines. Then send an e-mail message to Australia. Depending on which service provider you use, this will cost the price of a local phone call, or perhaps a few pence more.

At times it seems like Adam Smith has got lost in cyberspace. Much of the fabric of the Net was created with normal commercial imperatives suspended: from the transparent technical protocols down to the shareware, it is impossible to avoid people who have offered their work for free or next to nothing. Is Net culture really so altruistic, or do the software producers make their money in some subtler way?

The answer is a mix of the two. The Internet is still surrounded by a certain idealism - and there are those who contend fiercely that software should be free. At the same time products that appear to be free may not be. They are just so cheap their cost is absorbed in the fee users pay their service provider.

Electronic mail falls into the second category. You pay £10 or £15 a month to your provider, and are allowed to send more as less as much e- mail as you like more or less free (CompuServe allows a set amount of e-mail free, then charges 15 cents per Internet message.)

Cliff Stanford, who pioneered low-cost Internet access in the UK as founder of Demon Internet, explains how it is possible. "Hard-disk space is relatively cheap nowadays. We're holding about 4 gigabytes of mail - that sounds a lot, but it's spread over 25,000 customers." The providers have to pay phone companies to carry the messages, but because they take up so little space, the cost is minimal.

Mr Stanford says the £10 monthly fee he charges is enough to make a profit. "It is simply a realistic figure to pay for a nationwide infrastructure."

Software does take plenty of computer space - here the question turns on the people who produce the programs. Most commercial software companies are very protective of their software, and insist it be used only by people who have paid. They know many people use programs without paying, of course, because they are so easy to copy. But the Federation Against Software Theft makes fierce noises - and has carried out some high-profile busts on large organisations.

Some companies take a more pragmatic line. They allow their products to be downloaded free by private individuals, but do their best to make sure corporate users pay, and offer them a back-up service as an inducement. The Netscape "browser" for the World Wide Web - the most exciting part of the Internet - is available on this basis.

Much software is, however, produced by programmers playing around in their free time, or by students. They make their creations available on the Internet, either as "public domain" or completely free software, or as shareware. Shareware users are supposed to pay a licence fee after 28 days but there is no way of checking they do.

Even if they do not often receive a fee, there are many shareware producers who rub along because their overheads are so low (the Internet is, after all, a very cheap marketing channel). Also, publishers receive useful publicity. Perhaps the most startling example of this is the popular computer game Doom. Its creators, Id Software of Colorado, not only distributed the game on the Internet, but also published the specifications of its design. As a result, millions of Doom users are playing versions set, for example, in Brent Cross Shopping Centre rather than on a faraway planet. The creators gave up the lucrative exclusive right to design such extensions in exchange for a more intangible popularity.

That an honour-based system does work illustrates the anti-capitalist culture that surrounds much of the software world. To understand why, you need to go back to the mythical golden age of "hacking". Much of what we now take for granted in the computer and telecommunications industries was created in the Seventies by the dishevelled boy geniuses of computing. Working into the night on campuses in California and Massachusetts, programmers adopted and extended the Unix operating system, which colleges could license for next to nothing from AT&T.

Disdaining mundane commercial jobs for more creative academic esoterica, these hackers wrote and extended the Unix system, creating, for example, the TCP/IP protocol: the glue of the Internet. This software was never meant to see light of day as a commercial enterprise - although it was certainly intended to impress other hackers. The programmers thought: why charge money for something that came free? And why hide your handiwork when you can impress your peers with its fiendish brilliance?

The belief that software should be free catalysed into one of the stranger US ideological movements of the Eighties. Richard Stallman, a former programmer at the Massachusetts Institute of Technology, and perhaps the most famous of the software pioneers, created the Free Software Foundation. Believing that existing copyright legislation - with it roots in print media - is inappropriate for digital formats, the FSF makes its "copyleft" software freely distributable. It also encloses the source code, allowing the user to modify the program.

Mr Stallman describes the criminalisation of copying a program for a friend as "civic pollution". Indeed, he believes the whole concept of piracy is nonsense. "More people using a program means the program contributes more to society," he says. "You have a loaf of bread that could be eaten once, or a million times."

Even before he founded the FSF, Mr Stallman, aided by hundreds of programmers around the world, began work on a complete operating system based on these principles. The GNU Project is nearing fruition.

"Quite a few people use GNU software in a production environment," says Lee Wilcox, a software consultant. "And it's highly thought of." Steve Jobs, founder of Apple, chose GNU software for his NeXT machine although Mr Wilcox says some people like to pay for support "so they can have someone to shout at". FSF, which is a charity, keeps its eight staff alive with donations from resellers. Linux, another free Unix operating system, has reinforced the popularity of such systems.

After years of being told to "go to Russia", Mr Stallman now sees his heroic idealism affecting the wider community. "I think that businesses in general are more willing to use free software and believe free software can be good," he says. Few of them yet agree with him that non-free software is antisocial, he says, "but I don't mind. I set out to build a software sharing community, and I've done so. When other people want to be part of it, they are welcome. When other people want to go in some other way, I can't tell them what to do. All I can say is, I am not going with them."

Free software and shareware is available on the Internet via File Transfer Protocol. World Wide Web pages are often linked directly to FTP sites. CompuServe users have access to FTP: use the "find" function to search for it.