When Free Isn’t Good

Anil Dash has a wonderful piece of contrarian thinking up on his blog — it’s actually a week old, but it’s really timeless.

A little while ago, my friend Michael Sippey, whom I had the pleasure of interviewing the other day, sent me a link to the new Google Voice Local Search

Now, this new services seems like a good product, and I know I’m supposed to say “Wow, cool! Nice work, Google!” But… my initial response wasn’t positive. My gut feeling was “Why the hell aren’t they charging for this? That sucks!

Now, I hate websites which make you pay money. And a constant problem for bloggers is wanting but not being able to point to articles which are hidden behind subscriber firewalls. But Anil’s point is a bit more subtle than that:

Having paying customers would help focus the product team… If your product “may not be available at all times and may not work for all users” (as it says on the product’s homepage), then either fix it or get yelled at by angry users. Either one is a good option. Don’t hide behind a “well, shucks, we said it was beta, and it’s free…” excuse. Being accountable to your users makes your product better…

Connecting people via VOIP or sending them an SMS, two of the key features of the new service, cost money. At Google volumes, they cost a lot of money. I want to have a service I can rely on — which again means I need to invest in it…

Google’s made the leap here before, by starting to charge for Google Apps. Even people who use the service for free were reassured by the fact there was a paid version.

Anil also has bad memories of great web products such as MSN Sidewalk which disappeared because they didn’t make money. Me, I have bad memories of iname.com, which promised me free mail forwarding for life and then broke its promise.

As a rule, companies which give things away for free care much less about their free products and about their users than do companies who charge. This tax season, if you were given a choice between a free tax-preparation tool and one which cost say $20, which would you choose? Many people, quite sensibly, would choose the latter, just because it cost money.

Nothing makes me happier than services which are cheaper and better than the alternative; free-and-better, is, in theory, the best combination of all. But it still makes sense sometimes for people like Anil to want to pay a bit of money.

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1 Response to When Free Isn’t Good

  1. wcw says:

    I thought this was a brilliant business decision, and not at all pure altruism. 1-800-411-GOOG isn’t free, and more than broadcast television or “free” weeklies. You pay for each through the magic of advertising. Advertising a dominant brand is expensive, and to retain dominance you must spend. Coca-Cola spends as much each year on advertising as it spends on the expenses of administering its vast corporate empire, ~$2.5B.

    Moreover, I suspect there is a reason it exists only for business listings. Perhaps Google will start selling local businesses the 411-GOOG versions of its advertising products. Of course the SMSs and call forwards cost money, but if Google decides the advertising bump for their brand isn’t worth that cost, I expect they can pass it on to the businesses in question at a nice, little markup.

    The only losers in this game are the wired and wireless providers who some years back started using information calls as a profit center. Those 90%-gross-margin charges are all about to evaporate.

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