iMedia recently published this article: "The internet's dirty secret: free will cost you" by Anthony Casalena - http://www.imediaconnection.com/content/16432.asp.
Anthony raises the question to online marketers: What happens when this "ad-supported" model is transitioned from supporting not just content, but actual services on the web? The shift brings in the requirement of "customer service, reliable systems, and a dedication to fix bugs" - is the ad revenue enough to cover these costs?
According to Anthony, $32 billion is spent globally in online advertising. The bottom line: Hardware is consumed and servers host masses of free users that create "downtime" for paying users who are mostly professionals with higher traffic sites that can't afford to be offline for substantial amounts of time. How can marketing professionals eliminate this downtime - missed opportunity for business?
Antony M. from Spannerworks - http://www.spannerworks.com/ - gives an interesting perspective: http://open.typepad.com/open/2007/08/facebook-fandan.html.
But how much does free cost you?
I pay approx. $11-12 per month to use Yahoo! Smallbusiness - http://smallbusiness.yahoo.com/ - to host my website: http://www.bizrapport.com/. And it's worth paying this amount because I derive pleasure out of creating the site and experimenting with social media.
No free service could offer me the same tools. The service is terrific. Instead of adding a Yahoo! blog or one on offer through the service, I choose to add a Google Blogger one - http://www.blogger.com/, because I'm comfortable with how Blogger works and don't have to use AdSense if I don't want to.
Even though I experience bugs (as a free user) from time-to-time, I learn how to work around it and Edit Html too until my page looks right. Being able to combine the Yahoo! and Google services together works for me - the blog is accessible on every page of my Yahoo! website. Both Yahoo! and Google benefit from this too.
Free users of blogs do provide free content with innovative ideas, and serve as a broad sample base to gather statistics. Paying customers - marketers in particular - benefit from these ideas, statistics, and market exposure to their products and services, that users give away freely.
Where professionals can spread the costs of internet service, the non-professional often doesn't benefit from this form of scaling.
Weigh these benefits to professionals against the cost of their "downtime" and what's the result? How much "downtime" do the user and customer experience?
Similarly, even paid software isn't without its bugs and incompatibilities as we're aware with Microsoft products and others - http://connect.microsoft.com/Main/content/content.aspx?ContentID=2220. Customers still have to rely on global call centers (I've had the experience) and the online forum. Time is still money whether you're paying for the software or not.
And open source products (many of which are free) are aimed at taking into consideration those with disabilities -http://www.ibm.com/able/resources/firefox.html - what value do you place on this?
There are many aspects to consider when thinking about Premium versus Freemium. What are your thoughts?