4 ms·

It's actually pretty astonishing to me how many web sites don't charge anything. It reminds me of how Bill Gates gloats about the early days of MS how there was

by smakz 18y ago

It's actually pretty astonishing to me how many web sites don't charge anything. It reminds me of how Bill Gates gloats about the early days of MS how there was this huge hobbyist scene in software and very few were getting paid (not sure how accurate that really is but it seems similar to what I see today). Developers of start ups should get used to the idea that it's OK to charge people for a service you provide. It provides psychological incentives to the buyers that they are buying something and therefore are entitled to a real level of service, and it provides real cash to the founders to properly grow the business. Not to mention, it is trivially easy to start charging people these days, with services like Amazon FPS. I really thought back in 2000 that companies based around the 'advertising will pay for everything' model would have learned their lesson, but clearly it's not the case.

sachinag 18y ago
There's a lot of hate for ad plays here on HN, and that's fine. (My startup is a commission-based model as well.) But let's be honest - there are plenty of great, useful apps supported by advertising and lead generation where the end-consumer pays not a penny: Google, Yelp, YouTube, Zillow, SideStep, YellowPages, TicketStumbler, and so forth. And plenty of media sites make money on ads: Ars Technica, Pitchfork Media, TechCrunch, Huffington Post, and so on. Let's not let the quest for ramen profitability distract us from looking long-term.
- smakz 18y ago
  I don't 'hate' companies that see advertising as their only revenue source, I just question both it's effectiveness in running a sustainable business and the hesitation that software developers working as founders have in charging real money for the quality services they are building. I don't count media companies, as I'm not sure of any ycombinator start ups focused on media (in the sense of being blogs, such as tech crunch or hpost, etc.), and those list of technology service-oriented companies you list, it's fairly questionable how great any of their business models really were/are. Everyone likes to point out Google and YouTube, but they forget google owns online advertising, period. And YouTube never really made any money. Don't get me wrong - it's great being an acquisition target and it's a great way to make some quick cash, but I think generally founders under-estimate the potential of their own company of being self sustaining and being very profitable with a paying customer base.
- cstejerean 18y ago
  Agreed, a website with low recurring expenses and high volume of quality traffic can probably survive just on advertising. The problem with advertising-only models IMHO is that ultimately survival of the company depends on other companies' advertising budgets instead of the value it's products provide to their end users. At the moment that situation does not seem ideal.
  - jshen 18y ago
    "The problem with advertising-only models IMHO is that ultimately survival of the company depends on other companies' advertising budgets instead of the value it's products provide to their end users. At the moment that situation does not seem ideal." Um, depending on users paying you is equally problematic. I imagine this moment isn't good for that either.
    - smakz 18y ago
      Advertising budgets are down just as much as consumer confidence - they are tightly related. But even in hard times people's needs don't change - save people time, money, or make them healthier, #2 might be more attractive in recessions, but people will always pay for any of those services.
      - jshen 18y ago
        and they will find out about those services via marketing.
- access_denied 18y ago
  Google does not online profit from advertising revenue but also from data mining, when you use their services.
vaksel 18y ago
agreed, the great part of making users pay, is that you are profitable from pretty much day one, since you aren't spending an arm and a leg on infrastructure. There are thousands of websites out there that make their founders millions of dollars every year that noone here has heard of. Why? Because they are a paid service with only a few thousand users. A little math lesson: 3,000 users, at $99/mo = 3.564 million per year. And since they have a low volume of users, they aren't spending a lot of money on servers etc. By comparison for a free service to reach 3.5 mil profit per year, they'd need to have 3 million users. The great part about internet, is that there are millions of people using it. And a large portion of these users have never heard of all the free solutions we all know about since we read HN.
- smakz 18y ago
  Another point to this: people who run these sorts of low user, high margin companies will never reveal it to the hacker news/tech crunch/etc. crowd - for the simple reason that it will seem like it's way too easy how they are making money and it would only invite competitors. I'm not saying it's impossible to be extremely successful on the ad model, and there are certainly plenty of successes within Y Combinator itself which have been acquired based on free services - the only take away I want people to make from my posts is that you should consider charging people for your service because if it's good enough service and you do it with high quality, there really is no reason for you not to get paid.

by smakz 18y ago

sachinag 18y ago

There's a lot of hate for ad plays here on HN, and that's fine. (My startup is a commission-based model as well.) But let's be honest - there are plenty of great, useful apps supported by advertising and lead generation where the end-consumer pays not a penny: Google, Yelp, YouTube, Zillow, SideStep, YellowPages, TicketStumbler, and so forth. And plenty of media sites make money on ads: Ars Technica, Pitchfork Media, TechCrunch, Huffington Post, and so on. Let's not let the quest for ramen profitability distract us from looking long-term.

smakz 18y ago
I don't 'hate' companies that see advertising as their only revenue source, I just question both it's effectiveness in running a sustainable business and the hesitation that software developers working as founders have in charging real money for the quality services they are building. I don't count media companies, as I'm not sure of any ycombinator start ups focused on media (in the sense of being blogs, such as tech crunch or hpost, etc.), and those list of technology service-oriented companies you list, it's fairly questionable how great any of their business models really were/are. Everyone likes to point out Google and YouTube, but they forget google owns online advertising, period. And YouTube never really made any money. Don't get me wrong - it's great being an acquisition target and it's a great way to make some quick cash, but I think generally founders under-estimate the potential of their own company of being self sustaining and being very profitable with a paying customer base.
cstejerean 18y ago
Agreed, a website with low recurring expenses and high volume of quality traffic can probably survive just on advertising. The problem with advertising-only models IMHO is that ultimately survival of the company depends on other companies' advertising budgets instead of the value it's products provide to their end users. At the moment that situation does not seem ideal.
- jshen 18y ago
  "The problem with advertising-only models IMHO is that ultimately survival of the company depends on other companies' advertising budgets instead of the value it's products provide to their end users. At the moment that situation does not seem ideal." Um, depending on users paying you is equally problematic. I imagine this moment isn't good for that either.
  - smakz 18y ago
    Advertising budgets are down just as much as consumer confidence - they are tightly related. But even in hard times people's needs don't change - save people time, money, or make them healthier, #2 might be more attractive in recessions, but people will always pay for any of those services.
    - jshen 18y ago
      and they will find out about those services via marketing.
access_denied 18y ago
Google does not online profit from advertising revenue but also from data mining, when you use their services.

vaksel 18y ago

agreed, the great part of making users pay, is that you are profitable from pretty much day one, since you aren't spending an arm and a leg on infrastructure. There are thousands of websites out there that make their founders millions of dollars every year that noone here has heard of. Why? Because they are a paid service with only a few thousand users. A little math lesson: 3,000 users, at $99/mo = 3.564 million per year. And since they have a low volume of users, they aren't spending a lot of money on servers etc. By comparison for a free service to reach 3.5 mil profit per year, they'd need to have 3 million users. The great part about internet, is that there are millions of people using it. And a large portion of these users have never heard of all the free solutions we all know about since we read HN.

smakz 18y ago
Another point to this: people who run these sorts of low user, high margin companies will never reveal it to the hacker news/tech crunch/etc. crowd - for the simple reason that it will seem like it's way too easy how they are making money and it would only invite competitors. I'm not saying it's impossible to be extremely successful on the ad model, and there are certainly plenty of successes within Y Combinator itself which have been acquired based on free services - the only take away I want people to make from my posts is that you should consider charging people for your service because if it's good enough service and you do it with high quality, there really is no reason for you not to get paid.