The End Of Your Free Ride?

A few months back I had the chance to meet Wired Editor, entrepreneur, and author Chris Anderson at one of his book promotional stops here in Washington, DC.  His current book of note is Free! Why $0.00 Is The Future of Business which relates directly to the current business model of many web startups these days.  Gmail is a great example of this, but an even better example of this is Ning.com a FREE pay to use white label social network.  Fast forward just a bit and the whole idea of free software and web content is being turned on its head.  Whether you are a reader of the FREE (for a limited time) Washington Post, someone looking to Pop your email out of your Gmail or Yahoo! webmail account, you are no doubt finding that your long time free web habits are beginning to have costs associated with them.  Take Ning’s announcement of the end of FREE in July in today’s newsletter: “We’ll be phasing out all free Ning Networks.”  In fairness, they are going to be offering plans for as little as $3/mo.  In reality this is probably less about these companies reaching the end of their long tail hockey stick projections and more about these companies facing the harsh reality of the a need to support their operations with real revenue as opposed to online advertising revenue and other forms of subsidization (e.g. VC money, money from other company divisions).  The big question here is whether or not the web has reached the maturity point where social web applications like Ning have reached the point where they can be taken to market on a purely pay to play basis.  The next question that everyone should be asking, is what is the ultimate price for free.  Perhaps the best example of this is Facebook’s “perpetually eroding” privacy policy.  Something tells me this is going to be an interesting year for startup business models.

More reading on this subject:
The Danger of Free

Here is the full text of today’s newsletter from Ning:

“Hello!

We’re writing today to let you know about some new and exciting changes coming to Ning. In July, we’re doing two very important things:

1. We’ll be phasing out all free Ning Networks.

We want to provide a new level of innovation to Network Creators — and build all the valuable features Network Creators have asked us to. To get there, we need to focus 100% on paid Ning Networks. This phasing out of free services won’t happen until July, so you’ll have plenty of time to weigh your options. We’ll do our best to provide you with a migration path if you don’t wish to continue with Ning, but we’d love to have you come along for all of the exciting future developments.

2. We’re introducing new plans and pricing.

To help make it easy for you to come along with us, we’ve created new plans for every kind of Ning Network: big, small and in between. We think you’ll find these new options affordable for almost every budget — as little as $3/month. That’s an unprecedented deal that even allows you to go ad-free.

The plans will be available in July, but you can get a sneak peek at the details here.

What does this mean for my Ning Network?

While nothing is going to be changing today, we encourage you to check out the upcoming plans. If you don’t wish to continue as a Network Creator, we’ll be following up with you in the coming weeks to provide you with details on how to close out or migrate your Ning Network. You’ll have plenty of time to make the best decision for you and your members, and we’ll do our best to make that decision as easy as possible.

What if I have more questions?

We thought you might! We’ve put together a list of FAQs that will help answer many of your questions. Nothing will be changing immediately, and we’ll be contacting you again via email with more details.

Sincerely,