Enterprise IT Consultant Views on Technologies and Trends

Jul 28 2010   1:54AM GMT

There is no such thing as free lunch – Internet based services



Posted by: Sasirekha R
Tags:
Ads
free lunch
Opinion polling
payment
paywall
reCAPTCHA
surveys

There is no such thing as free lunch – Internet based services

 

As customers we are getting used to getting all kinds of Internet net based services – emails, instant messaging, news, search engines, translators, dictionary, encyclopedia, videos, music, booking tickets, sharing photos, greeting cards, technical contents, software products – accessible free. Of course, we do pay the broadband service providers. The variety and quality of things we can get free in Internet seem to defy the adage that “there is no such thing as free lunch”. But this may become thing of a past, unless organizations come up with some innovative options to be able to continue providing such services free.

That raises the question then how do these websites afford to provide such services free. Advertisements were the answer – by which these websites that provide freebies where making money – if not profit but at least enough to break even. While increased traffic to the site, increases the publicity and hence the number of ads, it equally increases the demand on the site’s infrastructure to provide quality service.

  Unquestionably, ads in Television channels are more effective than the ones in Web sites – as we are more attuned to ignore it and proceed with our work while using computer.

Of late, we are getting to see trends of how some of these web sites have started demanding payments for their services – with “The Times” and “Sunday Times” paywall being the latest. In an earlier blog http://itknowledgeexchange.techtarget.com/enterprise-IT-tech-trends/using-search-engines-effectively, I had pointed out the information that suggests Google getting into payment mode.  

Payment for Internet based services is neither a new concept and nor the one which customers totally shun. Customers have shown willingness to pay for Specialist services, Exclusive material and In-depth reports.  

When it comes to standard services, that is and can be offered by multiple service providers, it is clearly shown that the customers across the globe tend to move towards sites which offer them free. Reports mention that the traffic to the Times and Sunday times has fallen by two-thirds just after making registration mandatory. After the introduction of the paywall, according to web stat experts Experian Hitwise, “The Times” online has dropped from 1.2 million daily unique visitors to 332,800. This includes people who visited the home page and may not have gone beyond the paywall.

The debate about this payment move by Times is ongoing – whether it still would make financial sense for Times if the online readers drop by 90%; rivals currently ridiculing the move but may keenly adopt it if it proves to be a success; set of people pointing out that reduction in traffic could result in drastic reduction in the current advertisement based revenue;

Though for the short time, customers can hop from one provider to another for free service, the fact is that it would become more and more difficult for service providers to offer services for free. Expecting payment for every service seems to be an extreme step which would limit the number of customers drastically and also for the wider public it becomes a question of choosing the provider to whom we are willing to pay. Advertisers would also suffer from limited subscriptions.

Irrespective of the success or failure of payment based services, alternative to payments needs to be addressed effectively for Internet to continue as a global force it is and not turn out to be yet another channel of communication. 

While people tend to be averse to pay for standard services, quite a few websites involve customers in their activity for Beta Testing, getting reviews, getting content and thereby reducing their cost of providing service.

Service providers can come up with various techniques to make revenue or reduce their costs by involving the users without making them actually pay money. reCAPTCHA (refer to earlier blog http://itknowledgeexchange.techtarget.com/enterprise-IT-tech-trends/recaptcha-the-power-of-channelizing-human-efforts/) is a classic example of how the human effort can be channelized for achieving huge productivity – for free. Success of these technique could be guaranteed if they are designed in such a way to take the least possible time and effort from individuals, placed strategically at a location where the next step gives the user a service – say a free download, made mandatory without being explicit about it.

Some of the techniques that can be used to reduce costs or increase revenue are:

  • A mandatory advertisement to be viewed
  • An opinion poll to be answered – selecting one from multiple choice
  • A survey question to be answered (can be revenue generating if done as Marketing research for companies as well as can be used by Intranets to get Employee survey)
  • Specialized services like review, translation, updating content – leading the user to certain privileged access.

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