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How do free services on the web make money?

forbes.com

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Re: How do free services on the web make money?

#41

Post by camus »

BlindRubyCoder wrote: post #24

Many times they don't. It's usually something like Instagram where they give out a product for free in hopes that piles of people will start using it, and they'll "figure out something later". Worked out great for Google and Instagram, not so great for 999,999 other startups who tried it. Personally, I like the idea, but it's tough.

I always thought if you have a product that works but is free , you can commditize it by selling your infrastructure as a service ( paid API , hosting , etc ... ).

For instance , instragram could sell a way to make instragram clones in the cloud, like wordpress has a free blog script and sells blog hosting for that script, you get my point. Once you understand a domain and develop an app for that , should be easy to sell your app infrastructure as a service for thirdparty apps.

Re: How do free services on the web make money?

#42

Post by camus »

rmason wrote: post #9

Here's one he forgot: I've seen niche content sites that after building a community hold conferences. They may have advertising but it's the conference that's their main money maker.

quite a lot of enterprise opensource software companies do that. And their gigs are not cheap ;)

Re: How do free services on the web make money?

#43

Post by wizzo »

jacques_chester wrote: post #25

Advertising sucks because worldwide inventory grows faster than the supply of eyeball-hours to view the ads. So there's constant downward pressure on prices. Subscription sucks because you have to fight subscriber fatigue ... if you can get someone to sign up at all. People sweat over $5/month memberships; meanwhile they spend $20/wk on coffee. Micropayments suck because everyone hates the mental overhead. I have a s…

I have been using a microsubscription model for an MMO strategy game for iPhone/Android that I helped develop. (http://spaceuncharted.com) We charge $1/month or $10/year for access to the full game. Here are some things we've learned:

-- Apple only allows auto-renewing subscriptions for magazines, newspapers and other periodicals. So, for us, users have to re-subscribe every month, which has lead to very poor retention rates. On Android, we use auto-renewing Paypal subscriptions, and have had more success.

-- Having to manage separate billing systems for iPhone and Android adds a lot of development time and headaches. The Apple billing system is particularly time consuming because the errors you get if something isn't configured just right are not helpful.

-- Subscribers can have very high expectations for a service that is costs $1/month. When they're paying, they (rightly) demand a high quality product. We've been very liberal with giving out refunds or credits when bugs have arisen or we've had server downtime.

Re: How do free services on the web make money?

#44

Post by jacques_chester »

wizzo wrote: post #43
jacques_chester wrote: post #25

Advertising sucks because worldwide inventory grows faster than the supply of eyeball-hours to view the ads. So there's constant downward pressure on prices. Subscription sucks because you have to fight subscriber fatigue ... if you can get someone to sign up at all. People sweat over $5/month memberships; meanwhile they spend $20/wk on coffee. Micropayments suck because everyone hates the mental overhead. I have a s…

I have been using a microsubscription model for an MMO strategy game for iPhone/Android that I helped develop. ( http://spaceuncharted.com ) We charge $1/month or $10/year for access to the full game. Here are some things we've learned: -- Apple only allows auto-renewing subscriptions for magazines, newspapers and other periodicals. So, for us, users have to re-subscribe every month, which has lead to very poor reten…

Is "microsubscription" already the term of art in game development circles? Because I'm talking about a quite different funding model.

If the term is already being used to describe low subscription fees I'll need to thinking of something else.

FWIW, the tech I've lodged with the patent examiners could be extended to cover games as well (and I made sure to write a game in as an example). Single payment/funding scheme for web sites, web apps, phone apps etc is possible.

Edit: some googling sees a multitude of definitions (I wonder why I didn't notice this before?). I guess good names are hard to find.

Re: How do free services on the web make money?

#45

Post by belorn »

Nice list where the author is trying to make a comprehensive list, but then I also have some criticism of the article. It lacks some models, and it makes an implied relationship between for-profit and non-profit. In the English language, this is commonly refereed as making money vs raising money. A charity or non-profit (say Wikipedia) is commonly not talking about making money.

Some projects is funded by an indirect sponsorship model. Best example here is google and their model of giving 20 percent of an employees time to do what ever project that the employee wants. While Khan academy model is direct funding, projects that are an result of the google employee free time model is indirectly funded project.

Then we have non-profit and what they will consider to spend money and man hours on. Sometimes, that not even remotely related to their primary purpose, but is just something that interest the people in the organization.

Re: How do free services on the web make money?

#46

Post by dangrossman »

KnowledgeSponge wrote: post #22

There's a big one missing from this list that is somewhat recent. Selling the placement of audience segmentation/retargeting cookies on a publisher's site to a data aggregator like Bluekai (typically on a CPM bases) who then sells that aggregated data to DSPs/DMPs for use in display advertising. If you want to learn about a whole different layer of the ad tech industry, just start perusing some of the questions on Qu…

I wonder how they're going to work around two of the four major browsers blocking third-party cookies by default.

Re: How do free services on the web make money?

#47

Post by SiVal »

balajiviswanath wrote: post #15
saosebastiao wrote: post #13

Note that many of these fall into a bait-and-switch category. You use the product for free for a while, and then all of a sudden you are spammed to high hell, or functionality is taken away unless you pay. Paying isn't really that bad of an option sometimes.

Bait and switch model is a pretty old concept (promo offers, free trials, etc in consumer goods).

Those are not bait and switch unless the buyer is told that the introductory price was the permanent price. Bait and switch is a form of fraud where an offer is made and accepted, technically constituting a legal contract, but then the offerer reneges on the deal, claiming some sort of snafu beyond his control. Having not made the offer in writing and having apparently made some sort of honest mistake make the buyer unlikely to hold it against him, even though it is often technically a breach of contract. Oh, well, the buyer reasons, I may as well trade up and finish this thing, now that I've put so much time and energy into it. And that completes the bait and switch.

Simply offering "first three months free, then we start charging" is not bait and switch. It's a perfectly valid offer.

Re: How do free services on the web make money?

#48

Post by justincormack »

balajiviswanath wrote: post #10
rmason wrote: post #9

Here's one he forgot: I've seen niche content sites that after building a community hold conferences. They may have advertising but it's the conference that's their main money maker.

That's a good feedback, rmason. It is a niche model that could be added to the article.

Its not that niche eg TED.

Re: How do free services on the web make money?

#49

Post by davidw »

NathanKP wrote: post #11
david_shaw wrote: post #2

Disclaimer: I'm going to comment on my personal experience running a free web application, http://sleepyti.me . It's not meant to be self-promoting, but I feel that the experience is relevant. There are a lot of ways to make actual profit (not just break even) with free applications. The Hacker News crowd doesn't always show a lot of love for the "small, free application" crowd, and the echo chamber is correct that h…

Exactly. I did the very same thing, made a small app that showed off my coding skills. It only made about $1000 through Amazon Affiliate sales over the course of a year, but it got some press coverage and got me numerous job offers, one of which I ended up accepting. There is a lot of value to be had from providing a free web app if you are a lone hacker looking for a job.

So - the people who make enough to pay you a salary - what business are they in, and how do they make their money?

I'm not trying to be snarky. Well, maybe just a little, but in a good-natured way - I think you got a good deal that probably met or exceeded your expectations, which is commendable!

But you did not create a sustainable business. To do so with ads is not impossible, but since each user generally gives you way, way less revenue than with something where they pay for it, you really have to parsimonious with resources per user.

Re: How do free services on the web make money?

#50

Post by saosebastiao »

nonamegiven wrote: post #40
saosebastiao wrote: post #13

Note that many of these fall into a bait-and-switch category. You use the product for free for a while, and then all of a sudden you are spammed to high hell, or functionality is taken away unless you pay. Paying isn't really that bad of an option sometimes.

That's not bait and switch. > "Bait-and-switch is a form of fraud used in retail sales but also practiced in other contexts. First, customers are "baited" by merchants' advertising products or services at a low price; then customers discover the advertised goods are not available. Other products are "switched" for them; however, these items are often costlier." https://en.wikipedia.org/wiki/Bait_and_switch Bait and s…

But they are bait and switch when the terms and offers change after you sign up. Instagram for example.
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