End of a Free Era? Not Quite.

Americans love free things. From t-shirts and mugs to magnets and food, we love it if it’s free. So, when the web came along in the 90’s, Americans embraced the technology. Where else could you get free news, free information, free music, free videos, or free advice? The internet seemed to be one big free-for-all. Americans were in love.

However, this match made in heaven just wasn’t to be. Soon enough, in an effort to actually make money, “dot com” companies began dropping their free services and began replacing them with fee-based services. No longer could the American public easily download Vanilla Ice’s “Ice, Ice, Baby” in the same way as the past. Unfortunately, American’s were saddened.

“Why, oh why, is this happening?” the internet community cries. In short, web companies were failing to make money on their advertising-based models. In the Internet’s early years, websites were simple and easy to maintain. Thus, advertising appeared to be a sufficiently profitable strategy to make money. However, as soon as web “destinations” became increasingly more complex in terms of design, maintenance, and operation, web companies realized click-through advertising was clearly not enough. So, pressured by venture capitalists impatient for a return on their investments, “dot coms” were forced to sell their content and find alternate revenue streams. Most notably, Napster shut down their free file-sharing service in late 2000 in hopes of restructuring the service into a fee-based program. Because of this change, the once free and ubiquitous music-sharing service has long faded away into pop culture.

Does Napster’s fall signal the demise of other web based services and companies? A report by Jupiter Media Metrix found that 78% of publishing executives said they plan to offer some subscription content by 2003. However, 69% of consumers said they are unwilling to pay for content on the Internet. Three web based operations (Salon.com; Variety.com; and Britannica.com) have recently begun charging for once free content. Since the introduction of their fee charges, all three sites have noticed a sharp decline in users. Where are the once loyal users going? - To alternate sources of free content. For example, when Napster closed the doors to its free service, the doors opened for alternate music swapping services. Programs such as Audiogalaxy and Morpheus began cropping up throughout the internet landscape in hopes of winning-over Napster addicts to their service. The file-swapping frenzy didn’t even blink.

As in Napster’s case, when web-based companies switch to subscription based models they often fail. The internet community flocks to the free services and leaves the old in the dust. So, how can companies survive on the Internet when the masses refuse to pay? Many believe the key is to offer unique services that cannot be found for free elsewhere. In most cases when the “dot com” offers a truly valuable and irreplaceable product, end users are willing to pay (although angrily).

Fee-based services on the web are inevitable. Analysts predict that eventually, most web companies will soon have to operate more like brick-and-mortar establishments – actually charging for their service. However, in the information rich and ever-changing world of the internet, original ideas and concepts are becoming increasingly rare. Because of this lack of chargeable, unique services, it seems as though the free internet is here to stay.