So Over It: Free Stuff -- No, Thanks; We'll Pay

[Sporkman]

So Over It: Free Stuff -- No, Thanks; We'll Pay

* ByJoe Mont,
* On Monday August 3, 2009, 8:37 am EDT

NEW YORK (TheStreet) -- How does Twitter make money?

Not only is there no clear revenue generator, its costs are certainly significant. Despite speculation to the contrary, the company denies getting a cut of text messages sent via the site and has, in fact, negotiated bulk rates for short message service traffic. Add in storage, hosting and payroll, and Twitter is a very expensive freebie.

Twitter is an amalgam of what is good and bad about the burgeoning "freeconomy." The site costs you nothing -- a definite drawing card. But can it remain successful and/or free if there is no cash cow to milk?

"People are making a lot of money charging nothing," writes Wired magazine editor-in-chief Chris Anderson in his new book, "Free: The Future of a Radical Price." "Not nothing for everything, but nothing for enough that we have essentially created an economy as big as a good-sized country around the price of $0.00."

But "free" is often a trick executed with smoke and mirrors...

http://finance.yahoo.com/news/So-Over-It-Free-Stuff-No-tsmf-1763365996.html?x=0&.v=1

[MikeTheC]

In other words, Twitter is about as useful as this self-defense instructional video. (http://www.youtube.com/watch?v=piWCBOsJr-w)

[LowSky]

Sorry but what is your point exactly?

The internet is full of "free" services. Most likely paid by advertisements.
If companies like twitter or facebook cant make money on those models then they will go bankrupt.

[Arup]

Isn't Orkut, Facebook and others also free service, how bout Gmail, Google et al.

[Sporkman]

Sorry but what is your point exactly?


I believe the author is making the point that free isn't free, but rather incurs the following costs:

- Risk of data loss/service loss/loss of privacy,
- Decreased service levels
- Lack of innovation

...and that he is arguing that there is desire in the marketplace to explicitly pay for quality, service, and reliability.

[Arup]

Does that mean Linux which is free is risky and MS which is paid is safe?

[Tibuda]

Except for the finance, most of the points of the article is about Cloud services, not free services.

[Regenweald]

I believe the author is making the point that free isn't free, but rather incurs the following costs:

- Risk of data loss/service loss/loss of privacy,
- Decreased service levels
- Lack of innovation

...and that he is arguing that there is desire in the marketplace to explicitly pay for quality, service, and reliability.

i believe the author is dead wrong and simply joining the ranks if those panicking in the face of the new internet model that makes billion dollar corporations and business in general, pay for the internet. Considering that all their money is made off the consumer (that's me and you) anyway i don't see that problem.

let's say i use twitter (i don't) and coca cola and intel and amd server farm are advertising. I bought like five coke 2 litres over the past 2 weeks, you just bought a brand new i7 and the online backup service that we pay for runs on an amd server farm.

So are we all not paying for the friggin services already ?

[Sporkman]

So are we all not paying for the friggin services already ?

Yes - you are paying for the service by yielding screen real estate to ads, and allowing yourself to be influenced by said ads. (Unless enough people implement adblock measures, at which point twitter could no longer exist as a free service.) You are also providing personal information in return, which is a valuable marketing commodity.

[Marlonsm]

Just look at Google, I wouldn't say they are having financial problems.
Ads give a great amount of money if you have enough people visiting your site.

[dlmarti]

I think the author is just trying to explain something that is completely outside his realm.

His conclusion that "free" services don't innovate or grow is completely bogus.

Numerous companies today make money without charging directly for services, he sees this as bad because the "customer" is not the source of the funds.

Granted it is a difficult tight rope to walk. You have to service the people who AREN'T the source of the income, while keeping the people who are satisfied.

[Regenweald]

Yes - you are paying for the service by yielding screen real estate to ads, and allowing yourself to be influenced by said ads. (Unless enough people implement adblock measures, at which point twitter could no longer exist as a free service.) You are also providing personal information in return, which is a valuable marketing commodity.

exaclty :) i think this fresh wave of trying to convince those who do not know any better against FOSS is all fallout from Google's impending free operating system.
They are all quite panicked.

[blur xc]

...and that he is arguing that there is desire in the marketplace to explicitly pay for quality, service, and reliability.

http://www.smugmug.com/photos/photo-sharing-sites-compared/

An example of a free service - http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/02/02/BUG7QB3U0S1.DTL

So, sometimes, it pays to pay...

BM

[Sporkman]

exaclty :) i think this fresh wave of trying to convince those who do not know any better against FOSS is all fallout from Google's impending free operating system.
They are all quite panicked.

Actually, the author gives a shout-out to a FOSS product:


Big-name "free" services detract from other products worthy of support. The hype about a Web-based version of Microsoft's Office, for example, draws attention from the powerful tools of OpenOffice.

[toupeiro]

Probably the most common misconception about Free software.

Free != no profit.

OTA television is free, yet they make their money off advertising. Google search is free, they make their money off advertising. Get it?

[Sporkman]

Probably the most common misconception about Free software.

Free != no profit.

OTA television is free, yet they make their money off advertising. Google search is free, they make their money off advertising. Get it?

I do get it, except that's not what he's saying. He's saying "free" isn't really free - you pay in ways I've enumerated above, and in return you get lesser service, lesser innovation, and lesser accountability.

His main point is that there is a segment of the free market out there willing to explicitly pay to get better service, innovation, and privacy, as opposed to getting "free" stuff that not only may be inferior but is in fact not "free" in the end.

I do not interpret this as a shot against FOSS, as that's not what FOSS is about - with FOSS you get the actual software for free, but you can also get any level of service you want, depending on how much you are willing to pay (and companies/people *are* willing to pay, which reinforces the point of the author). Contrast that with a "free" service like snapfish, twitter, or facebook, which may seem like a good bargain (because it's "free")...

[Sporkman]

BTW, it's the openness of FOSS which enables the consumer to pay for any desired level of service. Contrast that with a service like twitter, where you get what you get, and if you want a particular enhancement or modification of the service, you're out of luck because it's closed & proprietary, even if you're willing to pay for it.