The Danger of FREEAlex Iskold

Founder/CEO AdaptiveBlue

Can FREE Backfire?

Example 1:

Open Source Gone Wrong

What is Open SourceSoftware?

Movement to make code accessible

Does NOT mean software should be FREE

A lot of followers and passionate believers

Success stories: Mozilla, Apache, etc.

Fine Print:

Kills off the competition by making basic Java software development tools FREE. Up sells WebSphere, Blades andconsulting.

The Aftermath:

Small Software Vendors are now extinct. Mediocre tool dominates the market. Lack/barrier of innovation.

Example 2:

Using Free toEnter the Market

Freemium Model With Low Free Storage

Entered the Marketby offering much

more for Free

(ad click-through: ~0.2%?)

You can argue that GMail issupported by ads, but what

about Google docs?

1. CompletelyFree

2. Funded by adrevenue

3. Competes withMicrosoft Office

Is this fair?

has

has wants

wants

You Are Welcome!

Example 3:

The AdvertisingSupported Business

Advertising: the 3rd bodyin the 2 body problem

B

C

BC

A

1. Complexity:Before: Business <=> CustomerAfter: Advertisers <=> Business <=> Customer

2. Overhead:

Need to learn the intricacies advertising.

3. Challenge:

Serve 2 masters: Consumers and Advertisers

Example 4:

The Moral Implicationsof FREE

FREE Things create sense of entitlement and shift in values.

Will they work as hard as their parents?

Discussion

Does FREE create a barrier for innovation?

Does FREE aid unfair market entry?

Does Advertising make businesses more complex?

What are the moral implications of FREE?

Alex.Iskold@gmail.comhttp://twitter.com/alexiskold

http://ReadWriteWeb.comhttp://GetGlue.com