The Internet is not free

free lunches are riddled with danger...

[tweetmeme source=”ChazGunningham” only_single=false] The Internet is not free. Not only is this a truism, it is in fact a good thing.

If an ebusiness (any business) is to last, it has to create value, and if it creates value, people will pay for that value. Deliver this value in a profitable manner, and you are in business.

Don’t get me wrong, I love free stuff, who doesn’t? I love browsing the internet, with its vast oceans of rubbish and floating islands of brilliance. I wouldn’t use it as much if there was a toll on every page.

In the main, we expect front end public web sites to be free. We will pay where the knowledge (like financial advice) can bring us personal returns or there is some kind of membership required (and for that you get access to valuable, niche information).

Running a successful internet business is not cheap. While the barriers to entry are low to get started, the real barrier is making a business out of it. But if you are to make an impact, making a business out of it you must.

If you are to survive they must charge someone something, and there are only three choices: advertising, e-tailing or premium subscriptions (or a mix of all three). If upgraded subscriptions become the norm (as the site starts to make an impact) then you could argue the site is no longer free. e-tailing will involve selling something online directly. So we are left with being beholden to advertisers. This can create a vulnerable business model (downturns in the economy affect advertising emodels first). Notice how the “freeness” of free sites disappears on their success. The free ones go out of business, only the ones that charge survive. QED.

Isn’t that precisely how the market is supposed to work?

About the author

Charlie has spent more than 20 years in Perth’s tech and startup sector, firstly as a founder himself, through to exit, and more recently as a writer, advisor and investor. Originally from the UK, Charlie worked in Singapore before arriving in Perth in 1997 to do an MBA at UWA. Graduating as top student in 1999 he set up online real estate business aussiehome.com, running it for 10 years before selling to REIWA, whereupon Charlie ran reiwa.com. In 2013, he moved to Business News to lead their digital transformation as CEO, and then worked for the federal government’s Accelerating Commercialisation program, funding pre-revenue startups and innovative businesses. He now works in an advisory capacity for multiple tech and other businesses, is managing editor of Startup News and co-host of the Startup West podcast. He also writes a column for Business News on startups. Charlie sits on the advisory boards of WA Leaders, TEDxPerth, WAITTA, the Perth Symphony Orchestra, and the full board of Rise Network.

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