Free Software vs Free Web Services

Beg Your Favorite Online Services To Start Charging You Money

Beg Your Favorite Online Services To Start Charging You Money

Moneybox
A blog about business and economics.
Dec. 8 2011 4:52 PM

Free Software vs Free Web Services

Maciej Ceglowski explains an important difference between free software and a free internet service:

I love free software and could not have built my site without it. But free web services are not like free software. If your free software project suddenly gets popular, you gain resources: testers, developers and people willing to pitch in. If your free website takes off, you lose resources. Your time is spent firefighting and your money all goes to the nice people at Linode.

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Free software works because the marginal cost of distribution is, in important respects, negative. It's easier to build something for free if lots of people use it than if only a few people use it. But while software is at the core of any web service, there are real marginal costs associated with services. Consequently, what happens when someone devises a really popular free web service is that he starts losing more and more money and eventually needs to monetize the business by selling it to an established company. The company more often than not ends up not really doing anything with the service, but has mostly spent the funds to acquire the talent. So fans of a web service have a vested interest in encouraging its creators to start charging money and find a business model other than selling.