Monetizing 2.0: Will It Stick?

There are days when I think I should have a t-shirt that says "I survived Web 1.0" so that I'm easily identified as a bit of a skeptic when it comes to the next wave of cool new toys. My husband worked for a 1.0 start-up for five years. Many of our friends also worked for start-ups, often moving from start-up to start-up like tiny ants hopping from one domino to another as they fell during the dot-com bust. So when I see all these great new services with no business plans, you'll pardon me if I roll my eyes just a bit.

Take, for example, Slide, who found themselves in the enviable position of growing very quickly to a user base of 125 million. The problem? Slide had no way of making money. Like Kevin Costner plowing over those corn fields, they built it, and people came, but then what? Of course, Slide founder Max Levchin quickly figured out that you can always add advertisements to your widget, but the real question now isn't whether the ads will be enough to sustain the service, but whether users will tolerate the ads rather than move on to the next service.

In this Web 2.0 world, where companies are trying so hard to get the user base that they will often offer everything for free to get eyes to the service, there seems to be an expectation that everything should be free, or at least have a freemium model. In the immortal words of the Fake Steve Jobs, these are freetards. Why SHOULDN'T you pay for a better product? If it's something that you use, that enhances your productivity, then that isn't worth supporting?

The problem is that people are constantly moving to the next thing that comes along. Sure, they may have found something that works, but if they want to go and CHARGE for it… Poor Nick Gonzalez over at TechCrunch got raked over the coals for exactly that mentality this week, when he suggested that a software product for the iPhone was great, but wasn't going to be successful if it wasn't free. I didn't even see the original article before I was inundated with responses in my feeds, with two notable retorts at 37signals and CenterNetworks. As both Jason at 37signals and Allen at CenterNetworks pointed out, people have to make a living. Bandwidth isn't free. Server space isn't free. And development time might SEEM free, but not if people can't make a living.

I see so many services launched daily with no business plan. Why is that? Sure, it's fun to code something fun and cool that people like using, but if you can't make a living at it, you often end up on the other side of what I see daily: companies folding or selling off or simply vanishing, all because they had no money coming in.

Making money is a fact of life, not a dirty secret. We all need to be paid to put food on the table. The old saying "You get what you pay for" still rings true, even in this "always free" 2.0 culture, and if we expect our favorite products and services to continue to meet our needs, they are going to need to survive, and it takes money to do that.