free beer

I’ve just read a post by Mark MacLeod who tells how business models for web-based companies have evolved during the past few years.

Once upon a time, technology companies built products and sold them…

How times have changed. First, vendors started getting SaaSy…

Then we stopped making users pay. At least not everyone. Freemium has emerged as a powerful way for startups to acquire bucket loads of users…

Now, we’ve gone off the deep end – where everything is free, all the time

You’ve got to relate this to Chris Anderson‘s theories who came up in late 2004 with the long tail theory, and then topped it with another provocative thought, the $0.00 business.

Mark’s post is very interesting, since he addresses a current issue that every entrepreneur faces, which is pricing of its product and service, amidst an ever-changing market and relentless competition. I invite you to read it. I had then a personal reaction to the article but the comment took more than a few paragraphs so I am writing it here:

There’s a simple rule: if someone can do it for free, then it will be inevitably free. For instance, that’s why content-based businesses (say newspapers) are doomed because there’s always people like Mark, me or even the average guy willing to spend one hour in their day writing articles and take pictures of what’s up.

The rule outlined above is always true, even if you have superior marketing, even if you are backed by government laws (demise of music albums for instance), even if have millions of VC money…

People serious about business should then move to areas where people can’t replicated it easily, for instance by having unique technology, or by having unique knowledge, or by having access to networks, or just by the good old fact that the product / service needs a serious amount of human (not computer) effort to produce and be offered to the client.

Of course, as Mark MacLeod said, this is becoming more difficult for entrepreneurs, as access to technology is becoming easier.

So if you are building a business, if at one point you discover that your service could be replicated by a 14-year old kid during his spare weekend by using “shortcuts”, then you should either consider it as a pet project — or move along to something more ambitious, more original, and that requires more effort.

Image: free beer

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I am an electrical engineer interested in disruptive ideas. Founder of MontrealTechWatch, organizer at MTLNe ...

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