According to Forbes, David Heinemeier Hansson has caused a ruckus by promoting the idea that online customers should actually pay for products.
Imagine that three shoe companies have come to you for some venture capital. They each have a different business model, as follows.
- Give away the shoes to get market share, then charge for them later when everybody is hooked on the brand.
- Give away shoes, but sell advertising space on the sides.
- Charge a fair market price for shoes.
Which company would you invest in?
Why is that so obvious with shoes, but not so obvious with online content and services? Probably because most everything on the Internet has been free for a long time.
We don’t fuss about paying for shoes because people have always had to pay for shoes. But it was a bit of a leap for people to start paying for water, or for the right to fish, because those things used to be free.
The internet culture of “free” is going to have to change (at least in some areas) because the simple truth is that ads don’t pay the bills. This is going to be a difficult transition and a lot of companies are going to go under in the process, but I don’t think there’s any alternative.