GIGAOM — Mar 13 — The lie of the Web 2.0 bubble is that free is the way to succeed in the new economy. That's not true. The best way to make money in the Web 2.0 economy comes down to creating something of value for people who will pay for it. Free is a tactic towards getting paid in other ways: through advertising, or by premium services (as in a freemium model), or maybe even through being acquired by a company with a large wallet. Free is only a tactic, though, not a business model. Web developers need to do the hard work of figuring out what's really of value to users before they build and launch their online service.
The full article was originally published at GigaOm, but is no longer available.
Mark Brooks: BasecampHQ.com is a great example of an application that could have been free, but that I'm perfectly willing to pay $24 a month for. Freshbooks.com also. They're well thought through and compelling web-apps. Could someone enter the market and create free versions of these web-apps, and make money from advertising. Sure, but $24 a month is reasonable. Consumers WILL pay for well thought out apps. So why not take their money? Basecamp still gets plenty of word-of-mouth. I'd rave about them whether or not they were free.
There are so few Web 2.0 apps out there that I’d pay a monthly fee for, but I’m a sucker for the once a year fee like Flickr has. Sites like Classmates.com seem to be such a rip off to me with their multiple monthly prices and you can’t really use it for free.
I figure you really have to suck me in with the free part, get me to use the site for a while (at least a couple of weeks) and then you’d be surprised how quickly I fall for the yearly fee especially if it appears to others that I’m now a paying ‘pro’ member. Yeah, sad to say, I fall for that kind of thing. Bonus if I actually get some extra server space or some special feature, but really it’s just about the appearance of being a serious participant!