Friday, December 23, 2011

The dilemma of free

MarketWhy Free Changes Everything

I've been blogging, and networking, and using every means possible to generate revenue online.  I've also participated deeply within the open source community.  I started browsing the Internet in 1994, so I've been using the Internet for 18 years.  Through all of these experiences, there's one thing that is consistent. People love free stuff and the Internet is an infinite supply of free stuff.

The combination of computers and the Internet drive the price of every product they touch to $0 (free).  This observation is at the heart of the problems with the music, newspaper, magazine, and publishing industries.  Before computers and highly capable software were so easily obtainable, each of these industries competed in a scarce economy. Not everyone could publish a book, make a CD, or produce news. Now everything online exists in an abundant economy.  It's a very challenging problem to have, but that's not the dilemma I'm most concerned with.

When consumers get a taste for "free" a few things happen:

  • The first thing that happens is that quality is no longer a threshold. We will accept any free version over one we have to pay for.  Ever watched a recently released movie recorded with a camcoder?
  • Logging onto the Internet or turning on a computer is a trigger which immediately makes us assume everything should be free.
  • Free becomes a habit. Once you can download Open Office or GIMP, then we get into the habit of expecting everything else to be free too.
The Paradox of Free

The dilemma of free is that when no one wants to pay for anything, then the only alternative left is advertising. And boy do we love advertising, am I right? So from open source advocates to independent authors or movie makers, we're all struggling to produce a good product. Since we're not Seth Godin or Mozilla, then we start pricing everything for free. When we try to move up the value chain and charge for our products we get little or no support. I've been sharing Amazon Associate links for 8 years. I've gotten only 16 click throughs, and no sales. I've got Google Adsense running on half a dozen websites, and I'm lucky if I meet the minimum once a quarter.

We easyily drop money on the stupidest of things offline, on vacation, at the fair, or at a Disney on Ice show. However, when we fire up the Internet, we close our wallets and expect everything for free. Going out drinking with your peeps on Friday after a long week of work, we will spend $20, $50, or maybe even a $100. When we conduct these transactions, we rarely thing twice. What is so different about online commerce?

Every company, every project, every artist(author) needs money to survive. Yet, we commonly entertain ourselves with their products for free. How are they supposed to find the money they so desparately need to continue producing entertaining or useful products, if no one wants to buy their products? Don't want to buy, then what about donations? Nope, we rarely do that either. When was the last time you made a donation to an open source project while using their products all the time?

Crying in my Coffee

As we are in the holiday spirit, I'd like to make one wish. If you find something on the Internet for free, and it entertains you, or makes you more productive, then find a way to compensate the producers of said product. Here are a few suggestions:

  • If they have products for sales and you've enjoyed their work, please make a purchase. If you already got it for free, then buy it and give it as a gift to a friend.
  • If they accept donations, then make a donation. Come on, if you're using software from an open source project, cough up a little money to show your appreciation.
  • If they only have advertising on their sites, then by all means click on their ads. I suggest this a lot and most people will say that's cheating.
How Advertising Works

Here is another example of the paradox between offline and online behaviour. When you buy a magazine or newspaper, there are a lot of advertisements. Sometimes there are products in those advertisements, that  you may never buy, ever. Yet the publisher collects their payment for putting that ad in front of you. Do you feel guilty or like your cheating those advertisers for not looking at their ads? Of course you don't.
Yet, when you see ads on a website that is providing something valuable, you don't click on them. If that is the ONLY way for the website owner to get paid, why don't we want to show our appreciation for the effort of making something valuable available for "free?"

Still leave a bad taste in your mouth?

The only option

We vote with our money. When we pay for something we say,"I want things like this." If we never vote for the products we enjoy by buying them, then we are subconciously saying I want to see more advertising. We are still in the infancy of the Internet, so it's hard to predict if a different model will emerge. Unfortunately the only option other than advertising is opening our pocketbooks and exchanging money for value. Let's make the Internet the global marketplace it has the potential to become.


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