What if everything on the internet shouldn’t be free?
There’s a wide conception among consumers that everything on the Internet should be free. The success of companies like Craigslist have promoted the notion that other than ordering products, everything else should be free. The work of Internet opinion leaders like Jeff Jarvis and Chris Anderson have forwarded the notion that free and freemium business models are both proper and sustainable. Basic economics would predict that in a market as competive as the Internet, all business marginal revenue would rapidly approach marginal cost. For all intensive purposes that means that everything should be darn near free.
However, there have been a number of recent articles that suggest that there are areas of dissension in this thought. Internet advertising, a prominent mode to support free content, is showing signs of cracking under the economic pressures. Banner blindness has been long documented and has limited the effectiveness of online “push” advertising.
Leading free sites in a number of categories, such as plenty of fish in dating, have started to try and find ways to charge users. This, despite being a vocal antagonist of paid business models. The Wall Street Journal was never able to remove the pay wall to its content, despite early intentions and signals that it would do so. The remaining newspapers are under enormous pressure from their seeming inability to do the same, as chronicled by Bill Grueskin on newsoaur. Twitter is under pressure to figure out how to make money from its rapidly growing traffic, and has considered paid premium accounts for commercial users
In the meantime, sites that have been unapologetically paid seemed to have weathered the storm, even in these tough economic times. eBay isn’t the powerhouse it once was, but it still makes very sound profits even during this spending crunch. eHarmony and match seem to be doing quite well in the space of paid online dating. iTunes never seems to falter and truly objective review sites like consumer reports have done just fine. For that matter “adult” content has been a pretty solid source of revenue since the dawn of the Internet.
The highest quality products are items that people will pay for. I don’t think it’s any different online. Just because there’s a large amount of content available for free, it doens’t mean that is what you actually want to spend your precious time reading.
There’s a fact that’s hard to deny. Most websites are a business, one way or another. Someone has to pay to keep the lights on. It might be through advertising, it might be through donations, or through subscriptions. There are times that you get what you pay for. For that matter, it is those payments that allow for potential improvements to many of these sites and products over time.
Even Craigslist, for all of its perception as a philanthropy, quite simply isn’t there just to do good. They charge fees for listings in a few places, and they aren’t a non-profit. Sure they could charge more, but don’t confuse a rational business decision with a wanton giveaway.
I’m still not sure where this all will end up. Certainly there is stress in the system right now that is straining advertising supported businesses. Targeting technology and other relevancy improvements could strongly improve the value of online advertising inventory. However, paid buisness models will have the resources to invest in product and marketing far in excess of lower revenue models. Feel free to leave your comments on the future of free.
