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Web 2.0 Showing Signs of Recession

Lori Halley 19 February 2009 5 comments

The Internet offers a lot of great free tools and services, and we’ve quickly become used to finding shoe-string solutions for storing files, collaborating on projects, communicating with others, sharing media across platforms, or bringing new interactivity to our websites. As the recession deepens, however, business models are changing — and nonprofits’ low-budget online toolboxes are changing, too.

‘Free’ always has a cost attached.

Generally, the free web tools and services we enjoy are (1) ad-supported, or (2) underwritten by paid “premium” subscriptions, or (3) offered without charge in order to draw attention to the company’s other products,  to which a price tag is attached.

But the growth of online advertising looks like it will be slowing down “significantly,” according to Forrester Research’s revised predictions for the next 5 years. And as everyone looks for ways to trim our budget, the volume of paid subscriptions may not bring in the expected amounts of money needed for developers to support a free version of their products.

Meanwhile, free online tools and services do have on-going costs for the providers in terms of webspace and bandwidth, maintenance, features development, and customer support — and realistically, there’s no obligation for developers to keep on giving away their work indefinitely.

Business models are changing:

Coming into 2009, CrazyEgg quietly dropped the free version of its visual website analytics service, and Onlywire bookmarking service relaunched with a “pay or promote” model. Last month,  Sprout Builder gave short notice that the free version of its “multimedia authoring solution” will be discontinued at the end of February. And just a few days ago, all-in-one online storage service Hordit announced that it, too, is moving to a paid-subscription model:

We’re all being affected in one way or another by the economic recession playing out worldwide.  We at Hordit are not immune.  Our intention from the start was to provide a base service for free supported by a subscription service.  Unfortunately, funding dynamics are changing and we have been forced to alter our plans.

Even Google is retrenching for tough times, merging some of its closely related applications and dropping less profitable projects. Active development of Google Notebook has been halted, for example, as have new uploads to Google Video in a shift of focus to “building a more comprehensive video search engine.”

What if your favorite ‘Freebie’ disappears?

One commenter at ReadWriteWeb (Sprout Builder Kills Its Free Publishing Service), who was not aware of Sprout’s planned change in business model, built a promotional campaign around its flash-based widgets. With no way to download the widgets she’d created under the old free plan — if there had been, she could have self-hosted them on her own webspace or at a free file-sharing site — the user is left with two choices: Upgrade to the paid service, or see the campaign widgets disappear.

For almost any free tool or service, the odds are quite good that you’ll soon be able to find an alternative if a favorite disappears — or if it suddenly has a price attached that moves it beyond reach of your budget. That’s the beauty of open competition, and a lot of very bright minds at work on the Web.

But a smooth transition won’t always be easy or painless.

Question: If a sudden price change puts a once-free service beyond your organization’s budget… what happens to any campaigns you’ve built that depend on that service?

Lori Halley [Engaging Apricot] Lori Halley [Engaging Apricot]

Posted by Lori Halley [Engaging Apricot]

Published Thursday, 19 February 2009 at 10:40 AM


  • Angie K said:

    Thursday, 19 February 2009 at 7:27 AM

    Question: If a sudden price change puts a once-free service beyond your organization’s budget… what happens to any campaigns you’ve built that depend on that service?

    Answer: If we've spent the time to build a campaign related to a new benefit or service for our membership or industry, you can bet there was a good reason. We invest our time based on the good of the industry, not because of the proliferation of freebies for making it happen.

    We'd find alternatives, simple and plain.

    I've learned the hard way that "freebie" services always come with a price. I'm working with our main hosting company to revamp our sites and consolidate our services. I believe we can get better service and an improved end-result/product, resulting in a dynamic and engaging experience for our online visitors and membership.

    I'd never scrap an entire plan because a free service is no longer free. But I'd also not build an entire plan around a free service. I've learned my lessons.

  • Lori Halley [Engaging Apricot] Lori Halley [Engaging Apricot]

    Lori Halley [Engaging Apricot] said:

    Thursday, 19 February 2009 at 7:43 AM

    Follow-up questions! :)

    In the initial planning stage, do you work out ahead of time what alternative(s) you might use if a particular service goes down?  Or do you deploy the free widgets as "foot soldiers" in your campaign, but keep the main content "headquarters" on your own website?  What's the back-up plan look like?

  • St Louis Rams said:

    Thursday, 19 February 2009 at 5:24 PM

    Spot on post Rebecca!!  Great blog - thanks for all your efforts

  • Steven said:

    Friday, 20 February 2009 at 3:07 AM

    I think relying on free services is doomed to failure, for the reason that what we're seeing today is similar to what happened during the dot-com bust of 2000.

    I get the overwhelming sense of deja vu, with companies suddenly trying to monetize their services once investments have dried up. Why, after nearly a decade, are internet companies relying on the same kinds of business models that didn't work the first time?

    And how many times are we going to fall for the word "free", without worrying about a service's longevity?

  • Janine said:

    Sunday, 22 February 2009 at 4:33 PM

    Instead of just looking for "free" products, look for Open Source.  Many programs have free community support, and while in some cases the program ceases development, you still have it and you still have what you created.

Sorry, this blog post is closed for further comments.

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