Charge 'em!

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By: Michael Goldstein on May 6th, 2010
Posted in: General
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Comments: 3

I’m inspired to write this from a couch in the middle of the Yola office in San Francisco.  It wasn’t at all the theme of the Web 2.0 Expo this week, but the conversation I had over and over again and the one I found most interesting was about building a profitable business in a world where users seem to expect everything for free.

In fact, it’s no different than the conversation I’ve had over the past couple of years with a friend that works at ABC News (that’s on television).  Users enjoy well-produced news.  Actually, they expect it.  Meanwhile, they won’t pay a fee for it.  They don’t want to watch the ads.  And, of course, advertisers can’t continue to pour money into media that doesn’t work for them.  Oh, and it’s pretty expensive to produce news.

Fred Wilson encourages his companies not to worry about revenue, to build a remarkable experience and attract millions of users.  Thus, Twitter.  And sure, it’s hard to imagine that Twitter won’t be able to earn a ton of revenue at some point.  Probably not from users.  Probably not from advertisers.  (I would never want to run paid advertising someplace that I’m considered an intrusion.  Wait, is there someplace that advertising is not considered an intrusion?  The Super Bowl, I guess.  Maybe the iPhone.  We’ll see.)  In their case, I suppose there has to be value in all that data.  OK, but someone then has to figure out how to get a return on all that data.  So, Twitter gives it away but may never monetize it.  Ning charges for it and they get crucified.

I’m thinking that if I was starting a Web service tomorrow, I’d lean toward charging users from the very beginning.  (My service would be so awesome that people would pay for it.)  I think consumers (which includes small businesses, I guess) are immature.  They need to understand that if the things they consume are really good it probably means that they cost money to provide.  If they cost money to provide and there’s not some philanthropic organization that’s willing to provide it, then they need to pay for it.

I’d offer a one week trial and then I’d charge!  I’d find out right away if my service has value, real value, to people and, if not, try something else.  Of course, someone else would come along and offer it for free.  I’d have to make the case that those people are going to go out of business at some point or their service is going to deteriorate because they don’t have any funds and you might as well pay me some reasonable amount and enjoy my service for many years to come.

I do not speak for all of OpenSRS, by the way.  (Internet geek idealists and socialists!)  Reporting live from Yola’s couch, that’s how I see it.

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