Gone are the days of charging the user...?
Internet
I think that the onset of such awesome free services has conditioned our average internet user to expect everything for free. Would you pay for an account on one of the blogging sites? (Or more specifically, would you pay a monthly fee every month to have a blog somewhere?) Can you imagine actually paying for a Hotmail account?
I have read some opinions that the days of making money off of advertising are dwindling. Maybe because the user is numb to ads?. I'm sure there is some sort of bell curve to this trend, but even if we are the downside for ad-revenue monetized services there is still a lot being spent (see MySpace+Google).
So, what happens if our users become so blind to the advertisements and so spoiled by the awesome free stuff? Do we try to entice even MORE users to “please take this free thing, please!” in order to make up for the reduced cpm rates? Or is it time to start charging again?
EDIT: On reread it sounds like I am complaining...I am not. I personally enjoy a lot of the great free stuff out there and hope it continues. I was just contemplating how to realize some income off of such a service (like InstantSpot ) while keeping it free (and of course bada$$).
What would be easier... sell X number of memberships and make $100/month or give away X*1000 (or something) and make $100/month in ad revenue?
Then, in order to really ramp up your user base, it makes a lot of sense to spend money to advertise your free service.
This is not new, I realize...but the topic is new again for me, sense we are actually facing it.
In the web world we are really focused on pay per click or conversions. It is great for many, but we really don't see Coke or Pepsi or Burger King working their branding magic to get eyeballs. I am really interested to see if / when that will happen.
As for free services a popular model now is to go after user bases quickly with a free kick butt product with the aim of a buyout by a major player who wants those eyeballs (or in the site analytics google wants the traffic/usage information). It isn't about short term profit but long term mega payout. High risk and requires someone with enough capital to sustain themselves until the event.
I have often wondered how hard it would be to build a visitorville.com clone with Flex. There must be a way to make money off of it and offer it for free.
Not sure where that puts us in the smart vs stupid line-up. :)
I think the content-driven ads are very often accurate, but are they effective? And at what volume (of impressions) do they become worth anything? Should sites like InstantSpot charge money for memberships instead of running ads?
I don't think we would have anywhere near the users we currently have if we charged for service.
Lets say we start charging $X/month for a site, but we only get 1 sign-up per 100 new visitors...OR we give it away for free, get 15 new sign-ups per 100 new visitors and hope that a couple of the users generate some good (search engine indexable) content and tell all of their friends/family about their cool new site and eventually make that $X/month via impressions/clicks.
Maybe its too early to make real predictions. I have been told a 2% click through for google ads is pretty good, which matches my experience in general. That requires a LOT of traffic for low paying keywords.
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