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One could make the argument that the radical quantities of free news and content on the Internet has caused as much hurt as gain... But then again, who doesn't love free? :)
the idea of giving things away for free. That one has been around
forever. Let's face it, people like getting things for free, and if
you can afford to give it to them and get them hooked and then charge
them later, then why not do that? I didn't mention it, but I'm pretty
sure that was Facebook's model too, long before they got VC money.
that your post was just sour grapes -- but I still think you are
wrong. Regardless of whether VCs support companies that are
unsustainable, this does nothing to "taint" the market for quality
content or services that people can't get elsewhere.
Those businesses still have exactly the same chances they would
otherwise -- except that, as Henry pointed out in his comment, they
can no longer charge higher prices than necessary because there is
plenty of competition (and yes, some of that competition is free).
Your music analogy is also incorrect, I would argue -- no one has
"trained" music consumers that music is free. If anything, many took
to downloading because the industry continued charging far too much
for CDs long after alternatives were available. That's the industry's
fault, not consumers. Music costs less to distribute now than it did
before, and the industry failed to adapt to that reality.
In any case, as someone once said, your competition isn't the product
or service that is better than yours -- it's the one that is good
enough. If someone can get away with providing that for free, then you
have your work cut out for you. If they are just a bunch of losers
being propped up by VCs then they will eventually fail.
we can agree to disagree. In any case I only post occasionally on SAI. If
you want to read more of my "controversial" opinions you can check me out at
whydoeseverythingsuck.com. I am sure you will find lots more to disagree
with:) This conversation has been fun, but I do seem to have ruffled some
feathers elsewhere!
http://bijansabet.com/post/30782384
Cheers,
Peter
Some things are given away as free as a loss-leader - think photo sites of the dot-com boom, where the storage was free, and the prints cost money.
There are plenty of examples, of course, but there does seem to be some of the same ideology from the dot-com era to Web 2.0: don't worry too much about a business model beyond free and advertising, and we'll just have an exit strategy.
The net result is that consumers may end up skitting from one free offer to the next (much like some saavy consumers have done with credit card borrowing). Consumers will learn to mistrust companies and software, and treat them as, at best, temporary tools to be used and discarded.
I presonally believe this is unhealthy, for the simple reason that relationships never form, knowledge never deepens, and efficiencies are never realized.
OTOH, many of these services probably won't make sense in 10 or even 5 years. And, it's probably a good lesson for the public to learn - that you really shouldn't trust corporations anyway. Last but not least, 90% of internet software is unnecessary and frivolous, trying to "carve out a niche" where no need previously existed. The problem is we don't know which 90%, and the market is doing this R&D relatively efficiently.
http://javajosh.blogspot.com
hank: your arguments & logic are just absolutely wrong, and they aren't even accurate if you were describing the market ten years ago (when perhaps a FEW of your observations were true, and not just patently false).
VCs aren't funding the majority of companies out there, small business or otherwise. and those that are VC-funded aren't only offering free services, and aren't only advertising driven. and those that are free and based on advertising aren't killing you.
see my comment for 3 specific point-by-point examples that rebut your assertions:
http://www.alleyinsider.com/2008/4/_free_is_kil...
get over yourself, deal with the market, and get to work building a product of value.
whether or not it's based on advertising, if it's useful & provides value, and if you're not a complete idiot, then it will survive. if it doesn't, or you are, then it won't.
period, end stop.