What Happens When Free Becomes Costly?

Newspapers were one of the first monolith business models to feel the squeeze in this new age of media consumption. Then like only a disruptive business model can, free content slammed into anything fit or not fit to print. It’s hard to beat free at any price is it not? But as Bob Dylan famously twanged, “Times they are a-changin’ “

At first take you might say well of course this is old news, but I submit as everyone is currently running in the direction of giving away their content for free, there’s a strong yet subtle change in the wind. And that change is the possible demise or end of “free” as we now know it.

Under this guise of “free” I’m not speaking about illegal downloads or circumventing pay-walls and such. I’m referring to the subtle yet growing number of sites that are no longer allowing users to just view or use tools that were once available to anyone at anytime. Maybe you’ve experienced this yourself. You visited a certain site but now you can’t access it without either becoming a member, paying, or they’ve closed down all together. Welcome to the “New” in the “New Age of Free.” And I’m here to state we are at the inflection point. Right here, right now. Everything is about to change and will change, just as fast, being just as disruptive to the existing models of “free” as what happened to the traditional business model landscape. If I’m correct I believe most will be caught off guard continuing to run in the wrong direction towards free and into oblivion. However those whom don’t will not only prosper, but will set the stage for decades to come. I know it’s a bold call, but hey, that’s what I do. Here’s some of my reasoning.

Kudos, That a boys, Awards, and most others don’t transfer into real money. And real money is all that creditors, supermarkets, babysitters, gas stations and more will accept if you want to eat, live, or fix the septic system. Even the baby sitter as impressed as she might be when you tell her your site has 2.5 million likes will still want cash as payment because as impressed as she might be they don’t take your “likes” as payment for her iPhone® at the mall.

Across the web the realization that revenue generation is critical even for a one man band. If you can’t pay your bills you can’t continue. Period. The goal of “Hey I’ll build something that looks good, and sell it out to investors for a killing.” Is dead. As I’ve written before on the “Bubblishish” rebirth of IPO’s (Initial Public Offering) back in May of 2011 and since. That period has now been crushed with the FaceBook™ debacle which is why I wrote this was the one to watch. All of the sudden many so-called “brilliant ideas” are not looking so brilliant because of the realization Wall St. no longer cares. Wall St. is only interested in THE MONEY! Why people forget that point is beyond me. I’m not saying that’s a bad thing, I believe it’s exactly what it should be concerned with. Wall St. is business, and business is in the business of making money.

Many sites across the web that were disruptive to the preceding models were brought to life and sustained by the hopes of what is referred to as Angel investors. These are the people whom put up the money in hopes of bringing the entity to Wall St. for the big payout in an IPO, or the possibility of the big buy out as in the Instagram®, FaceBook merger. This wasn’t just some writing on the wall they witnessed. This was the equivalent of these Angel investors starring horrified watching hordes of graffiti artists descending on their once pristine ramparts. The barbarians (people whom demand real results) were at the gates! Now just as in a siege to protect what’s most valuable (their money) projects are being jettisoned at a rate only comparable to the number of projects that will not see any halos. This is a critical juncture but even more so for the entire web based model we currently know and use. I truly believe we are in game changer mode once again. Everything one thought of as the “new” model, is now possibly the “kiss of death” model.

Imagine you’re a provider of content or service primarily on the web. You were under the assumption that if you allowed it to be viewed or used for free that was fine because the motive for building it was to “appear promising” that it would produce a profit somewhere, sometime in the future. However now your Angel investor is hammering you harder than a carpenter looking for exact dates and amounts. These Angels suddenly look and sound like bankers calling in loans. And people don’t call bankers Angels. Just sayin’.

If you think I’m off track here’s another example in my logic train. How many sites currently on the web that offer free content or usage of any type are even in the same universe never mind ballpark as Twitter®? The realization that an IPO for this darling of so many has been shelved should be a wake up call to anyone building something with “free usage” in its monetizing model. If they see a problem, you think the vast number of less than’s won’t? I contend we are just at the beginning of a sea change.

Just when the traditional resources of content and tools are about to be pulled under into the sea of free. They might find out that it’s not an ocean but a tub. And the very ones whom were not allowing them a chance to catch their breath may have unwittingly pulled the plug and the tub is draining.

Just how costly will the future be after all of this is anyone’s guess. But I do believe they’ll be money to be made in order to pay for it.

© 2012 Mark St.Cyr