5 ms·

Make it free or fail

35 points by kanebennett 16y ago

kanebennett 16y ago
I'd love to hear any thoughts or opinions on this post, and on my blog in general! (edited post due to name confusion)
Ixiaus 16y ago
I open source software when I feel it will benefit the greater community. But I've never felt pressure from the community to make any of my production code free. As a matter of fact, I think any pressure on developers to push their software free is silly - it should be a sincere offerring. Only sincere open source projects survive - otherwise you get the likes of half-assed licenses and crappy (but open, which isn't better IMHO) software. Keep what you want to yourself, as a developer, there isn't anything wrong with that and open what you feel like opening up - that's your right as a creative individual and professional.
robwgibbons 16y ago
Free software has been around far longer than any of the apps/websites mentioned here.
TomOfTTB 16y ago
I mean no offense to the author (who I do think is right) but I find it terrifying that the startup world has come to the point where "Have a business plan that doesn't rely on you having millions of users to be profitable" is considered an insight and not just plain common sense.
- chailatte 16y ago
  I wonder if it's already too late though. There are too many free webapps/mobile apps released. When the investment dollar dries up this year and the global economy crashes and all those startups can't raise the next round (and can't eat ramen/live with 5 roommates anymore), they would have a very hard time start charging for software.
- sliverstorm 16y ago
  "come to the point"? Wasn't it just 10 years ago people were saying "Go big or go home"? It's not like this misconception is anything new.
- alnayyir 16y ago
  Most engineers I know don't take the startup world seriously. They believe me that there are diamonds in the rough, in terms of companies and individuals that would be great to work with, but the industry and community are unparalleled in self-parodying. My colleagues' qualms have merit, the myopia is appalling.
deleted 16y ago
[deleted]
Vivtek 16y ago
The "entire free software movement" has nothing at all to do with Evernote or Skype, and everything to do with gcc, perl, Python, Ruby, sendmail, database engines, emacs, the Gimp, and a whole raft of other tools the world would grind to a stop without. I'll stand aside and let anybody bash the freemium model if they feel like it, but confusing that with the free software movement is a serious error.
- larrik 16y ago
  I don't believe the author meant "free as in speech" software when he was using the term. It seems he didn't consider the existing terms at all, really.
- bertil 16y ago
  Surprisingly enough, this paper was the first (that I read) to ever do it; I do spend most of my time categorizing different types of business models (and Freemium is too broad to be useful) and I usually read about the “FLOSS” environment.
dools 16y ago
I think you're mixed up about what Freemium is. Freemium means having a free option which allows people to become familiar with a product, and then paid plans which add functionality. Examples are Yola which is free unless you wat your own domain, Highrise which has a free "solo" package, Acunote which is free for a certain number of users etc. This is very different from "build it, they will come, figure out the money later" which is what Facebook, Google, Twitter, Tumblr and the like do (monetising these services inevitably leads to an advertising based revenue model).
- bertil 16y ago
  I'm not sure those can be separated as easily as you point out: SMEs who buy some ads on Facebook, but spend far more by making their page active, headhunters who have a paying account on LinkedIn, can be both considered as models where basic usage is free while more expert features are paying or where network externalities are decisive, and agents pay to benefit from their centrality.
deleted 16y ago
[deleted]
dtwwtd 16y ago
I feel that the author has a point, but only to a certain extent. There are also plenty of companies that focus on a great user experience and top not support. To provide some counter examples to the companies listed in the article, companies like 37signals or GitHub and many blossoming mobile game developers are executing on this very well, in my opinion.
- pquerna 16y ago
  I agree. Cloudkick did very well with a freenium model -- it let sysadmins try out our service on their personal machines -- and it led to many using it inside their businesses later. Those kinds of conversions and upsells are the perfect reason for a B2B application to have a freenium model. It wasn't about getting users for investors, we just looked at it more like a loss-leader and part of our user acquisition costs -- just like the costs of buying Google Ads, etc.
- robryan 16y ago
  Don't know if you can put 37 signals in there now, while they have free offerings they seem to do there best to make them only visible to those actively looking.
  - dtwwtd 16y ago
    Fair enough, they do seem to hide any free offerings. They seem to fit well into the "building a fantastic product, charging for it, and offering great support" group.
richcollins 16y ago
startups will be forced to pay for marketing to gain the upper hand This is only the case if you can't otherwise differentiate your product.
- robryan 16y ago
  Depends on your market, for a user focused web app that is novel enough to go viral yes. A B2B web app though might be the best solution to a problem but struggle because the businesses which would benefit the most have never heard of it.
hasenj 16y ago
The problem with "saturation" is not because things are free. It's only a problem when your product doesn't solve any problem. If your product does solve a real problem, and solves really well, you'll get the users. If you just make something cool that doesn't really do anything people need, well then, don't blame it on market saturation. There are types of apps that you can only reap the fruit of when there are lots of users. These apps can't succeed if they require you to pay before using it. Facebook is useless if you don't have friends on it. A blog is useless if people had to pay before reading it. Stackoverflow is useless without its huge community. Youtube is useless if uploading and watching videos wasn't free. Google would've been pretty useless if you had to pay before seeing the results.
- forensic 16y ago
  >Google would've been pretty useless if you had to pay before seeing the results. Debatable. If Google really did provide superior search results people would probably be willing to pay for it. At this point, I would consider paying for good search results. Google right now is more of a search for people who pay for a lot of SEO rather than a more objective form of search. Google Premium, for a small fee, could remove the ads and go further to eliminate SEO content. IMO this is going to be the future for many software companies. There will be the mass market version which relies on ad support and there will be the premium product which is paid for directly and provides a superior result. It has already begun in many sectors. Free stuff catches on quickly but in the long run, quality costs money, and there WILL be a place for quality.
kanebennett 16y ago
Loving your comments guys, thanks!
Eliezer 16y ago
Free content drives out unfree content.
forensic 16y ago
Free is a fad. (We should differentiate free in this sense from actual "Free Software" which is a completely different ballgame than what we're discussing here.) Having your customers pay you directly for a service is the natural state of most business arrangements for very good reasons - the big one being the lack of any conflicts of interest which erode product quality. The software industry is still a baby and the online services industry is a newborn. As the industry matures quality will matter more and this will lead to customers paying directly for software entirely to get access to a higher quality product. It has already begun with Apple, both hardware and software. Free is the dominate fad right now but it won't last forever.
rlpb 16y ago
I think there's a sampling bias here. There are plenty of more profitable products out there, and there always has been - but we're not aware of them because they don't have millions of people using them.
- InclinedPlane 16y ago
  Precisely. It's all about value per user. If you have a low value per user app then you need a much larger user base to turn a profit, so free/freemium/advertising based revenue is best because it's the easiest way to grow. On the other hand, if you have a very valuable app then you don't need many users and you can afford to charge for it. More so, you can afford to avoid giving away your app to people who don't pay you. Consequently, you may be making a tidy profit but far less people will have used your app or even know about it.
lwhi 16y ago
There might not be a tangible exchange (e.g. cash changing hands); this doesn't mean that a transaction isn't taking place. It's never a case of 'free' - it would be more realistic to refer the phenomenon as 'zero-purchase-cost'. e.g. Facebook isn't free - users pay with their attention.
joeyh 16y ago
"The entire free software movement, in my opinion, stems from just a few successful companies who utilized the freemium model" Now I need only to find a way to attach RMS, not yet even in his grave, to a suitable turbine..

35 points by kanebennett 16y ago

I'd love to hear any thoughts or opinions on this post, and on my blog in general! (edited post due to name confusion)

I open source software when I feel it will benefit the greater community. But I've never felt pressure from the community to make any of my production code free. As a matter of fact, I think any pressure on developers to push their software free is silly - it should be a sincere offerring. Only sincere open source projects survive - otherwise you get the likes of half-assed licenses and crappy (but open, which isn't better IMHO) software. Keep what you want to yourself, as a developer, there isn't anything wrong with that and open what you feel like opening up - that's your right as a creative individual and professional.

robwgibbons 16y ago

Free software has been around far longer than any of the apps/websites mentioned here.

TomOfTTB 16y ago

I mean no offense to the author (who I do think is right) but I find it terrifying that the startup world has come to the point where "Have a business plan that doesn't rely on you having millions of users to be profitable" is considered an insight and not just plain common sense.

chailatte 16y ago
I wonder if it's already too late though. There are too many free webapps/mobile apps released. When the investment dollar dries up this year and the global economy crashes and all those startups can't raise the next round (and can't eat ramen/live with 5 roommates anymore), they would have a very hard time start charging for software.
sliverstorm 16y ago
"come to the point"? Wasn't it just 10 years ago people were saying "Go big or go home"? It's not like this misconception is anything new.
alnayyir 16y ago
Most engineers I know don't take the startup world seriously. They believe me that there are diamonds in the rough, in terms of companies and individuals that would be great to work with, but the industry and community are unparalleled in self-parodying. My colleagues' qualms have merit, the myopia is appalling.

deleted 16y ago

[deleted]

Vivtek 16y ago

The "entire free software movement" has nothing at all to do with Evernote or Skype, and everything to do with gcc, perl, Python, Ruby, sendmail, database engines, emacs, the Gimp, and a whole raft of other tools the world would grind to a stop without. I'll stand aside and let anybody bash the freemium model if they feel like it, but confusing that with the free software movement is a serious error.

larrik 16y ago
I don't believe the author meant "free as in speech" software when he was using the term. It seems he didn't consider the existing terms at all, really.
bertil 16y ago
Surprisingly enough, this paper was the first (that I read) to ever do it; I do spend most of my time categorizing different types of business models (and Freemium is too broad to be useful) and I usually read about the “FLOSS” environment.

dools 16y ago

I think you're mixed up about what Freemium is. Freemium means having a free option which allows people to become familiar with a product, and then paid plans which add functionality. Examples are Yola which is free unless you wat your own domain, Highrise which has a free "solo" package, Acunote which is free for a certain number of users etc. This is very different from "build it, they will come, figure out the money later" which is what Facebook, Google, Twitter, Tumblr and the like do (monetising these services inevitably leads to an advertising based revenue model).

bertil 16y ago
I'm not sure those can be separated as easily as you point out: SMEs who buy some ads on Facebook, but spend far more by making their page active, headhunters who have a paying account on LinkedIn, can be both considered as models where basic usage is free while more expert features are paying or where network externalities are decisive, and agents pay to benefit from their centrality.

deleted 16y ago

[deleted]

dtwwtd 16y ago

I feel that the author has a point, but only to a certain extent. There are also plenty of companies that focus on a great user experience and top not support. To provide some counter examples to the companies listed in the article, companies like 37signals or GitHub and many blossoming mobile game developers are executing on this very well, in my opinion.

pquerna 16y ago
I agree. Cloudkick did very well with a freenium model -- it let sysadmins try out our service on their personal machines -- and it led to many using it inside their businesses later. Those kinds of conversions and upsells are the perfect reason for a B2B application to have a freenium model. It wasn't about getting users for investors, we just looked at it more like a loss-leader and part of our user acquisition costs -- just like the costs of buying Google Ads, etc.
robryan 16y ago
Don't know if you can put 37 signals in there now, while they have free offerings they seem to do there best to make them only visible to those actively looking.
- dtwwtd 16y ago
  Fair enough, they do seem to hide any free offerings. They seem to fit well into the "building a fantastic product, charging for it, and offering great support" group.

richcollins 16y ago

startups will be forced to pay for marketing to gain the upper hand This is only the case if you can't otherwise differentiate your product.

robryan 16y ago
Depends on your market, for a user focused web app that is novel enough to go viral yes. A B2B web app though might be the best solution to a problem but struggle because the businesses which would benefit the most have never heard of it.

hasenj 16y ago

The problem with "saturation" is not because things are free. It's only a problem when your product doesn't solve any problem. If your product does solve a real problem, and solves really well, you'll get the users. If you just make something cool that doesn't really do anything people need, well then, don't blame it on market saturation. There are types of apps that you can only reap the fruit of when there are lots of users. These apps can't succeed if they require you to pay before using it. Facebook is useless if you don't have friends on it. A blog is useless if people had to pay before reading it. Stackoverflow is useless without its huge community. Youtube is useless if uploading and watching videos wasn't free. Google would've been pretty useless if you had to pay before seeing the results.

forensic 16y ago
>Google would've been pretty useless if you had to pay before seeing the results. Debatable. If Google really did provide superior search results people would probably be willing to pay for it. At this point, I would consider paying for good search results. Google right now is more of a search for people who pay for a lot of SEO rather than a more objective form of search. Google Premium, for a small fee, could remove the ads and go further to eliminate SEO content. IMO this is going to be the future for many software companies. There will be the mass market version which relies on ad support and there will be the premium product which is paid for directly and provides a superior result. It has already begun in many sectors. Free stuff catches on quickly but in the long run, quality costs money, and there WILL be a place for quality.

kanebennett 16y ago

Loving your comments guys, thanks!

Eliezer 16y ago

Free content drives out unfree content.

forensic 16y ago

Free is a fad. (We should differentiate free in this sense from actual "Free Software" which is a completely different ballgame than what we're discussing here.) Having your customers pay you directly for a service is the natural state of most business arrangements for very good reasons - the big one being the lack of any conflicts of interest which erode product quality. The software industry is still a baby and the online services industry is a newborn. As the industry matures quality will matter more and this will lead to customers paying directly for software entirely to get access to a higher quality product. It has already begun with Apple, both hardware and software. Free is the dominate fad right now but it won't last forever.

rlpb 16y ago

I think there's a sampling bias here. There are plenty of more profitable products out there, and there always has been - but we're not aware of them because they don't have millions of people using them.

InclinedPlane 16y ago
Precisely. It's all about value per user. If you have a low value per user app then you need a much larger user base to turn a profit, so free/freemium/advertising based revenue is best because it's the easiest way to grow. On the other hand, if you have a very valuable app then you don't need many users and you can afford to charge for it. More so, you can afford to avoid giving away your app to people who don't pay you. Consequently, you may be making a tidy profit but far less people will have used your app or even know about it.

lwhi 16y ago

There might not be a tangible exchange (e.g. cash changing hands); this doesn't mean that a transaction isn't taking place. It's never a case of 'free' - it would be more realistic to refer the phenomenon as 'zero-purchase-cost'. e.g. Facebook isn't free - users pay with their attention.

joeyh 16y ago

"The entire free software movement, in my opinion, stems from just a few successful companies who utilized the freemium model" Now I need only to find a way to attach RMS, not yet even in his grave, to a suitable turbine..