There’s a discussion place on Techmeme today about the impact of the problems being created by these pesky venture capitalists that are funding businesses with no revenue model. Now Hank Williams (the other of the SAI article) isn’t known for always being optimistic. As his article bio states, “SAI Contributor Hank Williams is a New York-based entrepreneur. He recently launched a new blog: Why Does Everything Suck? Exploring the tech marketplace from 10,000 feet.”
Well Hank, everything doesn’t suck … even in the world of the free! While giving away content or services for free forever is not always the best business model, even the free model can generate revenue. Even if the VCs are the ones funding your business, there are people that work for free just out of passion. While this model isn’t sustaining there are plenty of people that can survive for months without any pay.
I’ve been able to live off keeping my blogs going for free. Are the blogs generating a substantial amount? Not really but I could care less how much the blog itself is making. What’s more important is how much value it generates and that’s where there is money to be earned. Matthew Ingram writes a more thorough article also explaining the value of a “freemium” approach. Give a little for free and charge them for more if they like it. Kind of like an ice cream sample.
The free model is extremely challenging because you are competing heavily just to make enough to get by. Eventually you need to charge for something though. A few lucky individuals (who are also the hustlers in society), are able to generate a substantial amount of revenue from building a free base that eventually generates cash flow. Those that can’t get by end up working for the people that were able to build a business. It’s the nature of business. So stop reading this article and get back to hustling Oh … in the meantime leave a comment and let me know if you think the free model works?