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May 16, 2009

Free is NOT a business model

The newspapers of the world are slowly starting to come to grips with the fact that free is not a business model.

As classifieds and display ads drained away from print media, the push was on to try to take the best advantage of the web. Publishing for free, combined with the Google-ization of the internet, has turned a once sought after and trusted resource, (The News), into a commodity with little to differentiate each news source.

Check any breaking news story on Google and you will turn up at least a dozen versions of the same story. The one you click on has more to do with the headline than the source these days.

Web 2.0, in fact most of the internet, cannot continue to be supported by Adwords and similar type advertising models. It is just not possible.

YouTube - Ads
News online -Mainly Ads
Facebook - Ads
Twitter - Who knows, probably some form of ads
MySpace - Ads (Lots of ads)
Bloggers of the world - Ads

There simply are not enough advertisers to keep this going forever. And as more people turn to interaction style marketing. Through blogs, newsletters, forums, Ning-style communities and other means, ads are going to start to suffer even more than they are today.

You can see the same thing happening in the way people work. Everywhere I look there are examples of Daniel Pink's Free Agent Nation.

One man companies are springing up all over the place, offering nothing more than their view on things and the skills and abilities they have come to collect over the years.

At some point we (The West in particular) have got to actually do something! We cannot just bounce around connecting with each other, pfaffing around with social media, and earning money from telling other people how to do the same.

We also can't be out there selling services only.

These are death spirals!

For this reason I love companies who have used the Internet to make something, not just draw a crowd and sell advertising.,,, LinkedIn - all great examples of companies who have generated additional revenue streams aside from ads and job postings. All doing very well, and all destined to outlive their respective competitors. (If they have any now)

Free followed by higher service payment - cool, that works and I am a big fan of as I have said many times here.

High volume low yield per transaction works. is another great company that I would love to emulate more.

What can you do today that is more than just buying into the already crowded services marketplace? What can you do to actually buiold and deliver something of value? What can you do to change the model from free with ads - to consistent reliable revenue streams regardless of advertising?

Adwords cannot subsidize the entire internet, and we can't all be free agents offering only services or it is all going to fall in a heap very soon.