In this day and age, it's common to have companies offering free services or operating on the "freemium" model but don't get disillusioned into the idea that it's the way to go - it isn't. At least, it's not the only way you want to operate. You have to work out a very clear plan that will pull in revenue to support anything that you plan to make free - someone has to pay for it after all.
One of the main problems with the free model is that it breeds a society that expects something for nothing. We start looking at our current economic state and it's easy to see that a lot of companies need to knuckle down and really focus on driving revenue.
What you don't know and don't see behind the scenes of these freemium modeled companies is that they're heavily funded by venture capital which is acting like their revenue - only, it isn't revenue it's debt that is a liability strapping down the company. So the company needs to quickly figure out how to make enough revenue to cover the liability and fast.
Meanwhile, the public (people) that do business with these companies with their free model start to crave more free service and expect everything free for nothing from them. This can really damage the economy as well as the operating basis of our society.
So, we need to get back to a clean exchange system where the public expects to pay for a service and the company delivers that service or product once paid for. It's a highly stable and sane model. I'm not saying the free model needs to go away but I do believe in many cases it needs to be scaled back. It's not a great solution for most companies. Companies should collect money for their products or services rather than try to subsidize their free model via some other method like ads or venture capital which makes a pretty shaky company.
When a company is working on a free model, it also de-values the product or service and the motivation internally to make it the best it can be but reversely, when you charge a fee upfront the whole company is motivated and incentivized to make it great. Their being paid to make it great.
In this market, more companies need to drive revenue that can be injected back into the economy and in order to do that we need to build solid and stable companies that operate with clean exchange that charge a fee and deliver a product or service to the client. Then do this in high volume. Rather than some subsidized life dependent company that solely relies on advertisers or venture capital. Let's get back to basics.
- Robert Cornish
CEO, Richter10.2 Media Group
