People Won't Pay

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

People Won't Pay

If your model is free, how do you pay the bills? How do you pay for the infrastructure - the servers, switches, collocation, bandwidth, labor, etc.? How do you pay developers and engineers to scale it and keep it up?

Twitter is still free and so is Facebook. Popular too. But both have issues with keeping it running. 

The funny part is that the longer it is free, the harder it will be to charge for it. 

The only app I can think of that transitioned to paid was Google Apps and Gmail for Business.

Recently, a Twitter app for Blackberry, UberTwitter, (that is free) decided to try ads with its update. OOPS! (Read it here). Was it the way the ads were presented ( with no lead up or announcement)? Or is it the Entlitlement mentality of most Internet users? 

There's a group on Facebook literally with the name We Won't pay for FB. I was told recently that FB's revenue is about $550M. How? There aren't that many ads running. And how much do you think it costs to keep Facebook and its CDN running? I would image over $1 million per month for bandwidth, gear, salaries, collocation, and the like. 

Advertising doesn't even bring in that much. The online advertising spend is much less than what marketers pay offline (like for print or billboards). So how will all these free apps survive?

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