Give It Away Or You'll Never Make Money

Give It Away Or You'll Never Make Money

Chris Anderson at Slate takes the long view on the effects that ultra-cheap bandwith, processors, and storage will have going forward, and comes to the conclusion that to make any money in the Internet economy, you'd better give whatever you've got away, and make money from ancillary items or services. And as consumers get used to the concept, other industries better get used to customers that demand a lot --for nothing.

The huge psychological gap between "almost zero" and "zero" is why micropayments failed. It's why Google doesn't show up on your credit card. It's why modern Web companies don't charge their users anything. And it's why Yahoo gives away disk drive space. The question of infinite storage was not if but when. The winners made their stuff free first.

Traditionalists wring their hands about the "vaporization of value" and "demonetization" of entire industries. The success of craigslist's free listings, for instance, has hurt the newspaper classified ad business. But that lost newspaper revenue is certainly not ending up in the craigslist coffers. In 2006, the site earned an estimated $40 million from the few things it charges for. That's about 12 percent of the $326 million by which classified ad revenue declined that year.

But free is not quite as simple — or as stupid — as it sounds. Just because products are free doesn't mean that someone, somewhere, isn't making huge gobs of money. Google is the prime example of this. The monetary benefits of craigslist are enormous as well, but they're distributed among its tens of thousands of users rather than funneled straight to Craig Newmark Inc. To follow the money, you have to shift from a basic view of a market as a matching of two parties — buyers and sellers — to a broader sense of an ecosystem with many parties, only some of which exchange cash.

Google is exhibit "A" of course, but there are many others you might not think of right away. Excuse me, I have to answer the phone Verizon gave me for signing up for cell service. BRB.

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 There's a lot of truth in that message, give away services to drive up traffic, traffic earns advertising dollars.

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Not to mention that is what 99% of what consumers like to see and ask for -- "What can I get thrown in" or "what kind of specials do you have for discounts?" etc....

Good way to get names out there

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Now if only ebay would follow suit..never will happen though. Anyone offended by their new so called "price cuts"? They cut the price on their posting fee's, but up their commission percentage. Mostly on items below 25%..which is the bulk of items. Trying to shovel some more pennies from every auction under the carpet. 

Personally, I love craigslist. No fee's or anything in regards to popping up adds. My bro just picked up a 23" apple display (older green bezel), called the guy up, talked to him, went over that day and picked up the monitor for around 150. Talk about a deal =P.

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