Web 2.0 vs Money: Where is the future of internet business?

The increasing trend in webbased businesses seems to point towards offering pretty much everything free.  Certainly, it has benefited those of us who need those free things (I’m using WordPress which, of course, is free) and enjoy the freedom of open source software.   This has unsurprisingly changed the way some companies do business but Web 2.0 does not mean the ‘free’ is the only way to make money:

For example, David Heinemeier Hannson provided a great tool to web application developers with Ruby on Rails.  Its a great open source product with a robust community that has been growing since the birth of Rails.  However, Hannson also runs an extremely successful company that provides web-based software…for a price.  His command of clients includes Sun Microsystems, Mayo Clinic, Obama ‘08, and Best Buy among many, many others.  Clearly, his formula for internet success works.  Check out this great video for a taste of the Hannson strategy:

A while back, I also read an article in Inc magazine about Plenty of Fish founder Markus Frind.  He operates a web service that is free to users but nets an income $10,o00,000 a year with just a handful of employees while he works just a several hours a week.  Of course, his strategy is strikingly different than Hannson’s internet market.  Frind attracts the average (maybe?) internet user looking for a quick date and utilizes a strikingly simple method of providing a dating service without a lot of bells and whistles.  He makes his revenue by selling advertising space especially to other dating websites that charge for membership or use.

Check out this extremely simple explanation of Frind’s success:

http://www.inc.com/ss/how-make-10-million-home-4-easy-steps#0

This begs the question:  Where will internet money come from in the future?  Frind’s business capitalizes on the concept of “free” while Hannson ensures premium prices yield premium products.  The Web 2.0 culture has certainly changed internet business but would sites like Frind’s exist if dating businesses charging for their product did not exist?  Probably not.  Frind’s main competition would exist in other free dating services operating under his strategy (if they existed at all) and probably would not be paying him for services.

So, maybe the internet is destined to be a self-perpetuating circle of “price” vs. “free.”  Opinions?

July 7, 2009  Tags: , , , , ,   Posted in: Career, Technology

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