knife knife knife: December 2011

Saturday, December 31, 2011

Wednesday, December 28, 2011

wrote this a while ago

Paying for Services

Everyone loves free things, but on the web free is increasingly associated with ads, lost data, and privacy concerns. Most recently, Gowalla, a location-sharing/storytelling app was bought by Facebook after a few years of going it alone and attracting a large number of users. Many people felt a bit betrayed now that their preferred location sharing service is closing down, but when you pay nothing for a service, it's hard to expect it to last.

And, even when services stay free, and continue to grow, an important question to ask yourself is, "who is the customer?" With the popularity of Facebook, Twitter, and even Gmail, users often vocally complain about new directions or changes to the site or app of their favorite web service. For most people, after investing time and effort building a profile, or a large email collection, they feel a sense of ownership over the platform, and hate to see it shift directions or suddenly innundate them with advertisements, but this is an unfortunate part of "free". Google, Facebook, Twitter, an many other companies actually serve Advertisers and other companies, and you, the user, are the product. This may be hard to swallow, but it's true. When you see an ad that's targeteted to you, your information was provided to the advertiser in hopes that you would buy and use their products. These companies pay Facebook and others to reach their users, and without these advertisements, these web services would not have any revenue.

One issue that often arises is that in an effort to build out and attract new users, web services often wait for quite some time to "monetize", and when they do, it comes as a surprise to many users. Twitter showed this to be true with the now famous "dick bar", that showed "promoted tweets" and trends to iOS app users on top of their Twitter timeline. While this "feature" was quickly pulled from the application, the ads and general direction of Twitter was here to stay. And, with the latest iOS app update, Twitter has brought in "Discover" as one of four tabs on the bottom of the app. Discover shows "stories" and the aforementioned promoted tweets, as well as trending topics. As before, there was a large user outcry against this change, but Twitter appears to be sticking with it this time.

When the user isn't the customer, they can't expect to be treated like one. Instead of being frustrated with a service that you have invested time into, try investing money into services that you love. If a service you enjoy doesn't charge money, contact them and ask them to do so. Running web services is expensive, and sooner or later, companies will need to make money. Keep companies focussed on delivering the best user experiences, by making sure they know you are the customer. This may not ensure that all web services survive indefinitely, but it helps. And, if you're starting a web service company, make sure you think about monetization from the beginning. You can learn a lot more from bootstrapping and paying your own bills than you ever will by having money thrown at you and "flipping" the company after a few years. Build value, user trust, and solve a real problem. That's the way to make a lasting business.