People who sign up for free services tend to resent a company for trying to wring revenue from the business later.
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From All That Twitters May Not Be Gold, Analysts Say which claims “the Web 2.0 model of building a product and then figuring out how to monetize it has been largely debunked.”
From All That Twitters May Not Be Gold, Analysts Say which claims “the Web 2.0 model of building a product and then figuring out how to monetize it has been largely debunked.”
Daniel Tenner
on 17 Mar 09I strongly recommend reading the comment thread on this at:
http://news.ycombinator.com/item?id=519929
This article was so bad that it even got flagged and deleted from HN, for just being grossly stupid (as the comments point out).
All that makes grand claims about Twitter is not quote-worthy.
Daniel Tenner
on 17 Mar 09Hmm, linked to the wrong article.
The one I meant to link to was http://news.ycombinator.com/item?id=518659 , and the comments aren’t half as negative.
That said, I still think this article is absurd. eBay is not a particularly impressive piece of technology, but because they have a de facto monopoly on online auctions, they’ve made oodles of money.
Twitter doesn’t have a monopoly yet, but it is (rightly) pouring all its resources in that direction. It’s still not clear which will emerge victorious in the instant-status-message fight between Facebook and Twitter, but whichever one it is will likely be sitting on a gold mine.
ryankuder
on 17 Mar 09This reminds me of a lesson our high school European history teacher taught us about Machiavelli many years ago: You can start out as an asshole and then get nice and people will love you. But if you start out nice and become an asshole, they’ll hate you. It’s about expectation setting. Set expectations of free, people will want free. Set expectations of paid and they won’t be nearly as disappointed when you actually charge them.
littlelazer
on 17 Mar 09I think this sentiment is incorrect, or at least incomplete. I think people resent when the company starts trying to wring revenue from the exact same thing they had previously given away for free. I don’t think (most/reasonable) people have a problem with the company adding on services that they then charge for, as long as the thing that was initially free stays that way. Otherwise they feel like something was taken away from them. There’s nothing wrong with charging, just don’t try to get people hooked then charge.
Dan
on 17 Mar 09See also, me and Jott.
A great service that I used a lot and haven’t since what was a free service became a paid app.
Rob Cameron
on 17 Mar 09How does that jive with the “Free Samples” chapter of Getting Real? http://gettingreal.37signals.com/ch12_Free_Samples.php You’re saying free samples are a great way to lure in paying customers!
”...we always offer some sort of free version of all our apps.” What’s up with that??
Rob Cameron
on 17 Mar 09Where’d my comment go? Did I get moderated? I didn’t say anything bad!
I stated the fact that the “Free Samples” chapter of Getting Real says: ”...we always offer some sort of free version of all our apps” and asked how that jives with this post.
There’s been a recurring theme of posts lately about charging for your products, but your own past talks about the virtues of giving things away for free. What happened? You guys can change your opinion, I’d just like to know what experiences you’ve been through that brought you to that change.
To exaggerate I feel like 1-2 years ago it was “free free free” and now it’s “only a fool would give away his product for free.” I feel like I’m in Animal Farm and you guys are changing the commandments, then trying to convince us that’s the way they were always written!
Ricky
on 17 Mar 09If you start out free, then switch to paid, you can always let your free customers continue with their free plans, with no new free signups. Then start adding features to the paid plans to encourage them to upgrade. Hoptoad took this approach, and I think it worked okay
Happy
on 17 Mar 09That the author of that article doesn’t see or recognize the immense value of a database full of millions of peoples’ seemingly every waking thought causes me to not give article or its premise (that twitter would be a bad buy) much weight.
Happy
on 17 Mar 09Maybe the author used the wrong word. ‘Discredited’ means to become untrusted and disbelieved. If the model is so untrusted as to be ‘discredited’, then few companies would be doing it. Yet, if few companies were following the model then we wouldn’t have all these posts and stories about how everyone’s doing it wrong.
Which is it? Discredited or popular? By definition, it can’t be both.
Daniel had the right word regarding the article: absurd.
Happy
on 17 Mar 09That the author of that article doesn’t see or recognize the immense value of a database full of millions of peoples’ seemingly every waking thought causes me to not give article or its premise (that twitter would be a bad buy) much weight.
nutheory
on 18 Mar 09Common web wisdom is that you start out free… get a user base that loves the product. Use the social network as leverage for users not to leave. 37 has done this great with things like solo plans, or page invites. you dont have to alienate users for upselling… it worked on me
Petros Amiridis
on 18 Mar 09If I get something for free and then exactly the same thing is not free anymore, then I might start resenting that company.
Nevertheless, in some circumstances if the service is so valuable to me and the new price is reasonable, I might feel alright with the whole new situation. I might also feel that I am supporting the company provide better services.
It’s not all black or all white. It depends on the situation, the product, the pricing, the value it gives me, the language of the company, the people, the communication and many more.
foljs
on 18 Mar 09I don’t think (most/reasonable) people have a problem with the company adding on services that they then charge for, as long as the thing that was initially free stays that way.
True. But, alas, most people aren’t reasonable.
Carlos Barbosa
on 18 Mar 09made me remember what i felt about get satisfaction, used to love it, now it’s been two months since my last use, going to ditch it from our site
indi
on 18 Mar 09@Rob – I don’t mean to comment for 47S, but the free plans were available alongside the paid plans from the start. Its a way of trying out the products in a useful way before you buy into it. That’s different than full functionality being free at startup and for the foreseeable future and then suddenly charging for it. That’s what Apple did with iTools and the switch to .Mac. At least they tried to offer some additional functionality, but those with free .mac email addresses didn’t really want to start paying for the priviledge.
Jeff T
on 19 Mar 09I am creating an inventory listing and search business for an industry niche that is going to give away the basic listing and search functionality for free. Taking this approach gives me a real selling point vs my competitors who are mostly subscription based services. Our goal is to then add complimentary and enhanced services to the offering (that I will charge for) while always keeping the core functionality free.
Really!?!
on 19 Mar 09Daniel = absurd… ebay and twitter could not be any different. Ebay makes money, always has, always will… Twitter, makes no money, never has, MAYBE will.
Really
on 19 Mar 09Daniel = absurd… ebay and twitter could not be any different. Ebay makes money, always has, always will… Twitter, makes no money, never has, MAYBE will.
REALLY!!!
on 19 Mar 09@Daniel Tenner… You are comparing Twitter to Ebay? REALLY Did you read the article? It points out Twitter makes no money, never has… maybe will. Ebay has made money from the start.
@Rob Cameron… the book talks about having a price (from the start) and then offering a stripped down version for free to get potential customers interested… it never says your product should be totally free… were you reading the cliff’s notes, or just skimming.
Facebook and Twitter are not revenue generating models… they are fads that do not make money. How is Zuckerberg considered to be worth so much… in reality all he has created is a company that is in dept. Great kid, keep up the good work.
Berserk
on 20 Mar 09@Rob Cameron,
The difference is when you have different plans up front. Then it is reasonable that the free plan is simpler. If you on the other hand offer a free service and then start charging for, then you have a problem (I know, I have had that problem..).
This discussion is closed.