Trajectories
27 Oct 2011I’m sure that this has been noticed before, but I’ve never seen it directly laid out, so here goes:
There exists a trajectory for any good, ‘free’ web service, be it a social network, a search engine, a blogging platform, etc.. It looks something like a parabolic arc. The height of its apex and the speed with which it is reached are different each time, but with enough data, you begin to see similarities.
In the early days, things suck. The site is ugly, it’s slow sometimes, maybe they haven’t got their core mechanics nailed down, or for a social network, the features are good but there is no one there. As things pick up steam, the venture vultures begin circling, more people get hired, and things start to rapidly improved. Things look better, more of your friends are using it, there’s some actual infrastructure money. There is a long, bright period at the top of the arc wherein everything is lovely on the user side. At the company, though, they know already that gravitational rot has already set in. They’ve never charged you anything, because no one ever charges you for anything. They may not even be sure that the product is worth enough to ask you for money. But the desperately need some. The high lifestyle of all their new coders and designers costs money, and the capital men lurking in the background are getting all sweaty in anticipation of their expected liquidity event.
If you and they are lucky, some big company will swoop in and provide the release that everyone is looking for, buying you up and then running you for years with benign neglect while they fold the bit of your tech that they wanted into their own product, or try to steal your user base or generally just figure out some way to make actual money out of you. Often a service can live in this limbo for years, providing use value and pleasure. The ending here tends to be swifter, when the new owner finally decides to shut the service down, or ’re-brand’ (almost always a fatal wound).
When no fairy godparent comes around, though, you enter the dread business of ‘monetization’. For the most part, this comes in two flavors: charging for premium services or starting to sell ads. I have no problems with using premium services to subsidize a free version. It’s a model that I like a lot, although I feel like people aren’t particularly transparent about their business models or flexible in their pricing (you have to take this with a grain of salt, coming from me. I think the Swedish(?) policy of having everyone’s tax bill be public is a great idea). Usually, though, this seems to be the best way to postpone the inevitable decline of a web service, although some of your users will inevitably complain that starting to charge money is actually part of your decline.
Go down the path of advertising, though, and you’ve basically submitted to your fate. It seems easy at first, because ad companies like Google have made it really easy to drop stuff right in. You make a little bit of money, but not really enough to pay anyone. So you have to make more changes. You realize that you’re actually answering to two sets of customers now, and only one of them is paying you. So you make compromises. Over time, you realize that your advertisers are winning every time their desires come into conflict with those of your users. Eventually your users realize this, too. Then they leave, if they have any place to go.
Google is entering this phase right now. They weathered the ownership problems and the external CEO, and any number of other issues that could have sunk them. But inexorably, since it holds the purse strings, the ad-serving part of their business will take over, and will ruin the user experience and usefulness of their service for everyone. Already there are issues: if you run ad-blocking software (which is within your rights. If they don’t want customers who don’t see ads, they’re welcome to turn you away, which is within their rights), or software that keeps them from tracking you elsewhere on the web, it breaks basic search most of the time. At this time, there is no real exit, so you can only chose voice and evasion.
These are hard times. Business models are in violent flux. Many companies are not sure where their next dollar is going to come from. I sympathize with people who’re using ads to patch together a business that they love into something that works. The market isn’t fair or perfect or even good, most of the time. I am not sure that there are good answers. Premium service pricing is only a partial solution, and isn’t going to work for everyone. Independent artists are a particular quandary. It’s time, though, to start looking around for solutions.