
August 9, 1995 was an infamous day in the history of business. That was the day that Netscape’s IPO set lips a flutter all over the business world about this new, ingenious strategy: Give your product away for free. Now we have free browsers. free online content, free memberships, free PCs, free web TV, free internet access, free software and free music.
The idea was that if you offered your product for free, soon you would have a massive volume of "customers" and you could sell them peripheral services. But for most companies free has been a bad deal.
Newspapers conditioned readers to free web content and then realized they couldn't make enough with online advertising. MySpace just laid off 30% of its workforce because of cash flow problems. Facebook is on the rocks. Up-sell conversion rates for free software are mostly miserable. Hulu is re-thinking their free programming strategy. Free browsers are subsidized by other products the company sells.
It's time for the age of free to end. Customers have enjoyed the free ride, but most companies are realizing they just can’t survive as chumps. Newspapers need to charge subscriptions or micro-payments for their most valuable content. Facebook needs to charge a yearly subscription. Services like Hulu need to charge for their programming. Browsers and other web software need to charge for all but the most basic functionality.
It's time for media, web and software companies to realize that it's ok to charge customers for the value they get. Free isn't a strategy, it's a dead end.