Monday
Mar032008
Beware of Freeconomics
The quote below is from this post from ReadWriteWeb
It is of course on a topic that I've written a lot about, so I won't comment on it further, just that I agree :)
While we are certainly seeing more and more examples of products being given away for free, it is not necessarily a good thing. There are different aspects and faces of free. The Flickr free, which Fred Wilson calls freemium, is the model where the basic version is free and the premium one costs money.This model is very different from the GMail model where the entire product, with full features, is completely free. The downside of freeconomics is a monopolistic market, with barriers to entry, and little incentive to innovate. In addition the middle-man and transactional complexities are the other side effects of this new economic trend.
(Read the whole thing: Beware of Freeconomics)
It is of course on a topic that I've written a lot about, so I won't comment on it further, just that I agree :)
Monday, March 3, 2008 at 9:00AM 
Reader Comments (3)
How do you think the RSS reader market, both desktop and web, is different, given that you promote a totally free newsreader? Why is that an acceptable market for "freeconomics", whereas you say you agree that it's dangerous here?
It's not different. BlogBridge needs to be free because it competes with other great products that are free. Google Reader is an excellent product, and it's free. Recently NetNewsWire which is an outstanding product, IMO, was 'forced' to be free. I would credit competition with BlogBridge but more likely it was competition with Google. Unlike BlogBridge, NetNewsWire comes from a fairly sizable company with venture investors and a significant burn rate. I don't know anything about their finances but I have to imagine that they are struggling with their business model.
Gotcha. That's a fair difference. In competitive markets, "free" becomes a necessity. NewsFire, another leading Mac RSS reader, also fell victim in that space, forced into becoming free after NetNewsWire set the bar for great readers at no-cost.