Killing innovation

Checked a post at GigaOM by Anne Zelenka titled “Free: a tactic, not a business model” where the statement is made that web services developers need to think about how they get paid for their service before they launch. And that “free” as in what the user pays for a service is not the answer. Umair Haque reacts to this post and is totally right by stating that the pricing model of “free” services is not the same as the business model, or put differently, that you can have a business model although you give away the service for free. Therefore, I agree totally when he says:

“Now, I think this is a really damaging post. Killing network fx is really what kills next-gen businesses – way before they ever have to worry about a profit model. The point is that you can figure out revenue streams and profit models – but not if you’ve already destroyed your business by not thinking about the value created by free.”

Think about it: you have developed a kick ass web service that will probably be even more valuable because of network effects. So you decide not to charge users a fee but are not sure yet how to monetize it. Advice of Zelenka: don’t launch because the service is probably half-baked. Uhh…

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2 comments

  1. “Free, Perfect and Now”, the book by Robert Rodin, explains the growing need of customers wanting their needs filled in by products that are cheaper, better and faster. The Internet is no exception. If one can gain significant momentum by making (parts of) his web service free, this can only be beneficial to the end user.

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