Slashdot Mirror
Making the "Free" Business Model Work In a Tough Economy
Randy Savage writes "With venture capital on hold and advertising revenue down, the WSJ discusses where online business models might go. 'Over the past decade, we have built a country-sized economy online where the default price is zero — nothing, nada, zip. Digital goods — from music and video to Wikipedia — can be produced and distributed at virtually no marginal cost, and so, by the laws of economics, price has gone the same way, to $0.00. For the Google Generation, the Internet is the land of the free. '"
from TFA:
> It's a consumer's paradise: The Web has become the biggest store in history...
Telecom companies implementing tiered service models, destroying Net Neutrality will fix that temporary glitch. While they are at it, lets hand-out to them some public bail out tax^H^H^H printed money for the privilege.
There is no "free" business model.
There are forms of benefit that don't come from giving objects in exchange for money.
Didn't I hear this once before, when the dotcom era ended and all the "free" businesses had to start making money? Realisticly all the "techy" parts like servers and bandwidth should keep getting cheaper, so that helps. And in a hostile market, marketing goes first as it's an "expense", then you lose your customers, then the marketing budget comes back. When else are you going to fight for your customers than when they're scarce? The alledged death of ad revenue is heavily overhyped.
Live today, because you never know what tomorrow brings
The real appeal of free software is in reducing infrastructure costs. Just like roads, they don't normally generate money themselves, but they make it easier for businesses to interact and generate wealth!
(-1, Raw and Uncut is the only way to read)
So, all those datacentres buying hardware and using electricity, are they free too?
Sooner or later there is a cost, and free services have one big problem for long term survivability, where's the profit?
A great free service may be fun, might even be useful, but sooner or later down the chain someone needs to be paid.
Or are all web developers working for no pay these days?
A learning experience is one of those things that say, 'You know that thing you just did? Don't do that.' - D. Adams
The short story on micropayments: The first one that tries to use it, dies. Why is wikipedia beating the crap out of britannica? Because if you want a general link you can post to that everyone can use, it must be an open site. How often does slashdot link to paid subscription articles? Never. I rememer there were a few NYT articles in the past that required free subscription, and it was always plenty bitching. I'm not sure what is or was competing with YouTube but the premise is simple, if you want to share a video you post it there and everyone can see. The result is that anyone that tries have their google rankings go to hell and toil away in obscurity. This will not work unless there's a really, really broad coalition that makes sure that the vast majority of the Internet population has a micropayment account. I put the odds of that happening at slightly below me winning the lottery three times in a row.
Live today, because you never know what tomorrow brings
Debian Linux would have cost at least $1.9B to produce in a private environment. $1.9B may be smaller than what Microsoft spends on Windows, but it is a hell of a lot more money than "marginal cost."
Let's also not forget the fact that there are few, if any, desktop OSS apps that are as robust as, say, the Adobe suite of products or Microsoft Office.
It does OSS no service by giving people the impression that it is cheap and easy to produce. In fact, that is downright self-destructive because such an impression will make people behave even more like cheapskates. "What do you mean I should buy a supported license? I don't need to help pay for no stinkin R&D!! This stuff is supposed to be free? Why am I paying you anyway?!"
People in software development are the only ones I can think of who promote the idea that they should be paid less (e.g. this story) and that most of their colleagues suck (e.g. thedailywtf).
If you look at the market, you see a lot of giveaways that used to be unthinkable. McDonalds is doing "free latte mondays" to draw business away from Starbucks while Denny's is giving away a free Grand Slam breakfast [dennys.com] to each visitor tomorrow in an attempt to push coupon books out to customers. (Thus encouraging them to think about the large and inexpensive breakfast they can get there.)
The key is that these businesses have solid revenue models that their giveaways promote. Web-based businesses are in a slightly tighter pickel. With advertising budgets getting slashed across the board, ad-supported websites are feeling the same pinch as print and broadcast media. Now is the time to find alternative revenue streams such as premium content to back their free services. Things like selling larger downloadable versions of free web games or state tax filings [taxact.com] to go with free Federal filings.
I think there's a difference between McDonalds giving away free hamburgers and Wikipedia. The summary makes a good point "an be produced and distributed at virtually no marginal cost, and so, by the laws of economics, price has gone the same way, to $0.00." but misses the totality of it. What the net does is remove intermediaries, the middle-men. If I write a book the cost of production is my own time, plus my editor's time. If I want to make $50k a year off of that, I need to sell some ungodly millions of dollars worth of that book because I'm paying for printing, warehousing, distribution, space on bookshelves, not to mention all of the inflated salaries and bonuses sucked up by the bloatworms in this whole process.
I'll move far less copies selling direct but I don't have to sell as many to earn a living. Will it be a tough gig? Hell, yeah, but it wasn't exactly easy to be a professional musician or writer back in the 60's, either.
I think what will really help move digital product is a greater feeling of connection with the creators. I wouldn't see the need to give any more money to the rapper running around with multi-million dollar contract, assuming I liked rap, but I'd want to support the little guy who's just starting out, I want to see more work from him.
The patronage model seems too altruistic to work in the real world but we're seeing signs that it really is possible.
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
Just about anyone 30+ can remember using Lycos, Alta vista, Yahoo, or Excite long before Google, and can remember typing in a single word, and having what you want in the first 10 results.
So yea basically before there were ad pages that contain nothing but keywords that were registered with the search engines.
but as camperdave said "The trick is that your ads must not get in the way of the consumer getting to the information that they want. If you break that popularity feedback loop, you'll drive consumers away. It has to be subtle enough to not interfere."
This is very much the reason google is nearing the end of its life cycle, and reason behind the need and great importance for them to hook you on email, web apps, etc.... Just as Yahoo and others did before. History really does repeat itself.
The P2P rip doesn't generate the $150 million dollars needed to produce "Monsters vs. Aliens" or the $40 million needed for the low budget "Serenity."
If the geek wants to see more films that appeal to him he has to find a realistic solution to the problem of how to pay for them.
Otherwise production simply ends or shifts to more profitable markets. "High School Musical" and a "Hotel for Dogs."
Unfortunately, your docs - most likely a downloadable pdf or similar - will end up getting torrented within the first five copies sold. If you don't believe me, go to The Pirate Bay and search around for technical docs and even entire books.