A Toaster isn’t a Peppermint
Facebook acquired Instagram and all the world’s aflutter.
The breaking (and apparently controversial) news projected me into a rather interesting conversation between Michael Norton and Adam Hyland. 1
The discussion quickly steered into the topic of “free” services like Instagram and Twitter. Adam responded to my quip with:
What chaps my ass about this whole “don’t do free” crusade is some products NEED to be free or they won’t work.
This might be nitpicking, and I’m probably building kingdoms on straw foundations, but I think “free” is a misleading term for some services. Google & Facebook make money from “free” — Instagram and Twitter do not. The latter, to me, is the truest form of “free”. You use the companies’ services as you please and they take nothing in return. It’s the digital equivalent to a bowl of peppermint candy at your local restaurant’s checkout counter.
Services like Facebook and Google are entirely different beasts. They farm user data and sell it to advertisers. When you make your money off of user data, your priorities shift. You start making decisions you would otherwise never make if you either charged for your product or truly gave away your services freely. Twitter or Instagram would never have tarnished their service the way Google crippled search with Google+. 2
But that’s because Google is playing an entirely different game than Twitter or Instagram. Google is a legitimate 3 company that earns profits, which is a sustainable business model. Gmail is the free toaster when you open a checking account at Bank of America. Twitter and Instagram are the single girls at the prom, hoping that “showing up” to the party alone might land them a date.
The flaw with Adam’s thinking is running a truly free service isn’t the goal, earning 30+ million users and draining financial resources isn’t a model to run a business. Instagram, Gowalla and Twitter can’t operate indefinitely this way. They either need to monetize their business or sell.
But that’s a risky hand and only a few players win.
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Both whom host the absolutely delightful podcast, The Impromptu. ↩
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Arguebly, the dick bar fiasco is a good counter-example, but that was quickly resolved since Twitter has a VC funding cushion to lean on. ↩
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I am regretting writing this sentence in real-time. A milestone, I’m certain. ↩