Sign Up for Free: A Dishonest Business Model  

Sign Up for Free: A Dishonest Business Model

 

Sign up for free and get free software, says the web page of countless companies providing software as a service (SaaS). I still well remember the days when สมัครgmail  nothing was for free: the software was expensive, you had to pay for upgrades, maintenance, training, service calls, etc. It seemed like a good old fashioned honest business: I do something for you and you pay my fee. Several years ago free services and free versions of software started to pop up and since then the phenomenon has grown like mushrooms. When I fist noticed the movement, I rushed to the library of college books to check out Economics 101. Maybe the theories of basic economics have changed? Nope. You still need money to run a business. OK, then perhaps basic arithmetic has changed. Negative; according to the legacy of Greek mathematicians zero plus zero is still zero. Then perhaps the piper decided to play without a compensation. Wrong again; he ain’t playin’ till you payin’. OK, so no one seems to work for free, it still takes money to run a business and lots of zeros do not add up to something, then where does the money come from?

Before we find this out, let us analyze another phenomenon that spreads like disease: buy-one-get-one-free. This has become so popular that people literally look for items in the grocery store that come with a second free addition. Whoever invented it was a genius and whoever buys this is a naive shopper who left half of his brain at home (i.e. 80-90% of the population). Do you really believe that the merchant gives away half of his inventory for free? Come on! First and foremost, the second one is not free, you already paid for it with the first one, and second, this promo is only for items that do not sell very well. So what is in it for the merchant: volume sales and more profit, plus getting rid of unwanted items. What is in it for you: the illusion that you got something for free. The very same illusion that sign up is free.

Let us play a little game called follow the money train. The production of free (looking) software like e-mail, web search or facebook, follows a simple pattern:

Investment. Someone with deep pockets believes that what you plan to do is profitable in the future and provides a better return than the stock market. You get the money and develop the software.

 

Promotion. Customers are invited to try out the software for free. Hey, if it is free, it is for me! So you give it a try and if it is half way good you may like it and begin to use it.

 

Addiction. The software turns out to be better than expected so the user begins to make heavy use of it. So much so that it becomes an important part of his daily software need. Yes, it has become a basic necessity, an addiction (it would be hard to live without Gmail).

 

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