Fred Wilson On The Defense Of Free

by Christopher Paul on July 16, 2012

Fred Wilson in defending “free” as part of a business model:

“When scale matters, when network effects matter, when your users are creating the content and the value, free is the business model of choice. And I don’t think anything has changed to make that less true today. If anything, it is more true.”

Fred doesn’t make a clear distinction between free vs ad supported and defines them as more or less the same. From a pure cash transactional point of view, I’d agree. But to support the ads that support the service, there is a cost associated with it. For Facebook, Google (and their associated properties), Twitter, etc., the cost is privacy and/or some slight inconvenience when having to view ads. Never the less, I’d agree that services that charge on the backs of user generated content aren’t going to make it.

One other point that Fred mentions that I feel needs special attention is this:

“I do not believe it makes sense to charge users to create the value.”

I feel this applies to newspapers and the news industry though Fred doesn’t apply it to them. If you look at the NY Times and other “papers”, you see they allow comments. They build up (or defend) their online readership by offering that. No user is going to want to pay for the privlage to read first then comment. They’ll find the same news somewhere else and comment on it where they can do so for free.

I don’t mind Twitter wants to charge ads. If they want to charge for certain search or API use, fine. But I’ll never pay for it and no paid Twitter-like network will ever scale the way Twitter has. Same with Facebook. Though I hate the creepiness of it, I understand it doesn’t take my cash to keep the lights on; it takes my information and eyeballs to do so. I can live with that.

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