Avoiding The Pitfalls Of Free

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Misaligned interests create tension in the design process that can lead to bad, and potentially unethical, design decisions, that result in inferior products. In this article I will examine how the desire to build a large audience by giving away your products and services free of charge can cause conflicts of interest, which in turn can lead to dubious compromises in the design process that limit the full potential of your work.

The recently launched Twitter competitor, App.net161, which has raised over $800,000 in the first month of fund-raising/pre-sales, has started its life as a simple premise: Twitter doesn’t work because the interests of the company and its users, along with the developers creating apps for its platform, are not aligned. They’re not aligned because as a free product Twitter doesn’t make money from its everyday users and developers, and thus does not hold any obligation towards them. Like most other free Web services, Twitter is building its business model on advertising, the advertiser becoming the customer, and its users, bluntly put, the product.

While it is possible that the interests of the multiple parties you are trying to satisfy with your product or service overlap, it is likely that there are also differences in what they want. In those cases where the interests vary, the product designer will have to pick the party whose interests will take precedence in their design decisions.

For example, if you build an audience of users through a free product and then go on to sell advertising, there may arise a conflict of interests on the issue of privacy. The advertiser benefits from knowing more about the users, while some users may wish to keep their information to themselves. The two conflicting interests force the designer to pick a side, either to push for more information sharing in order to make the most out of advertising, or to take a stand on the privacy of their users while losing the potential for more advertising revenue. If they decide to give away user information without their permission they will also be giving away their users’ trust, along with their own integrity.

Nothing Is Free

All work requires compensation, whether monetary or otherwise. Sometimes we choose to work for free, in regards to money, but that choice is always based on some other form of compensation. When we give someone a gift, we receive emotional compensation in return because the action of giving a gift satisfies our desire to please someone we care about. We may give a gift to somebody we do not know, but this also works the same way, providing us with emotional nourishment that satisfies a compassionate soul. Sometimes we create work for ourselves, that is, we work on something because we enjoy the creative process itself, the work being its own goal. In those cases, the process, together with the end product, are our compensation.

An artist may work on a painting for its own sake, the work being its own reward, but they will not work for free when commissioned to produce a piece for somebody else, unless of course they have the desire to present the work as a gift, in which case they must know the person they are working for well enough and care about them enough to feel that the emotional reward outweighs the toil. When this is not the case, when they do not wish to give away their work as a gift, they will seek monetary compensation, for even though they may enjoy the process of creation itself, the act of giving away their finished work and their time — and thus, a little of their life — requires fair compensation.

Money Or Love2
The designer’s dilemma lies often in the difficult choice between monetary payment and satisfaction of a job well done. Image by Opensourceway3.

Developers of today’s free Web apps and sites do not know their users well enough in order to give away their work as a gift. The bond between them and the recipient is not so strong as to generate enough desire in their hearts to wish to give away their work for free. One exception to this is the open source movement, in which case the work is given away as a gift, though the compensation has less to do with the recipient than with the intended function of the work.

Open source software is first and foremost created to satisfy a certain goal that the developer has, and the fulfillment of this goal is reward enough for them. They then release their work into the world and may derive further benefit, like patches to the software and prestige for themselves, but this further benefit is only an extra, only the icing for the cake which has already been eaten. In a few cases the software takes off and grows at a rapid pace, but the initial compensation has already been paid in giving the developer what they wanted when they first set off to create it.

Contrast this with free products and services that are not open source. Those products are given away free of charge, but they are not given away free from the maker’s desire for compensation. Since compensation does not come from the users it is sought elsewhere.

Advertising: A Gateway To Conflict Of Interests

Typically, this path leads to advertising. If the users aren’t going to pay for their product, the advertiser will pay for the users. The product developer begins to introduce ads and other forms of sponsorship deals. This creates a conflict of interests. On one hand, the product serves a specific purpose for the user, on the other, an ulterior motive is introduced in the form of advertising, which in turn uses the product as a means to sell something else, the product itself being relegated to the status of a promotional vehicle. The focus of the product is split in two:

  1. it must work to perform a certain function for the user, and
  2. it must get the user to click on an ad.

While it is possible to keep these two goals separate, in many situations they are not mutually exclusive, which forces the designer to pick sides and make compromises.

Some product designers and developers proceed to mask this conflict of interests by pretending that the two goals don’t actually point in different directions, and that their primary focus is always on making the best product possible, which in turn brings them more users, and thus more advertising money, the latter being the outcome of the former.

This stance is taken for two reasons. First, telling users that they are the product is not going to go well with them, and neither will admitting that you are compromising design decisions that improve the product to the advantage of the user for design decisions that only benefit the advertisers.

Second, this viewpoint may even be a subconscious reaction to the inner dilemma that the product designer has to face when they are forced to pick between two or more conflicting interests. A good designer does not want to compromise their integrity. They want to make the best product they can, which means a product that best serves its primary purpose, that is, its function for its users, so they try to resolve the conflict with a different explanation.

Twitter Changes4
Since Twitter relies on advertising, it had to make quite unpopular decisions recently. The company limited access, enforcing display requirements, and forming guidelines for what sort of apps they want (and don’t want) to see on the platform.

But this doesn’t work. You can pretend the conflict of interests isn’t there but that will not make it disappear. For example, Twitter recently began to push back on developers who make apps for their platform by limiting access5, enforcing display requirements6, and forming guidelines7 for what sort of apps they want to see on the platform, and what sort of apps they don’t. Apps that are seen to compete with Twitter’s main offering, i.e. consumer micro-blogging, are discouraged.

Twitter’s initial goal was the creation of a simple micro-blogging service, which they’ve allowed to evolve into different forms to suit its many uses. But now, having to face the reality of needing to make the service pay, they turn to advertising, and in turn are forced to enact much greater control over how the user interacts with their product in order to reshape the service into a viable advertising channel. Now, there is nothing wrong with Twitter taking the advertising route to make money. That’s not the issue. What’s wrong is the situation in which they find themselves, having to strike a compromise between the needs of the advertiser and the needs of the many developers of Twitter apps who have helped get the service to where it is today.

Twitter does not technically owe anything to those developers, but to push them aside when you’ve reaped the rewards of their labor is not a decent thing to do. The roots of the problem are unclear commitments, which have been there from the very beginning. If the developers paid for the service, Twitter could work without hesitation on delivering them the best platform and API for their apps. Without this commitment, the various parties work together on a foggy perception of aligned interests, only to later find themselves in trouble when they discover that their interests aren’t so aligned after all.

Then we have the problems with privacy breaches that pop up all the time with services like Facebook and Google (Wikipedia has whole pages dedicated to listing criticisms of the two companies, here’s one for Facebook8, and one for Google9). Once again, these companies don’t make money selling a service to the end user, they make money from selling advertising. This creates a conflict where the product developer has to decide whether to focus on satisfying the needs of the user, or making the service more lucrative to advertisers by sometimes breaching the privacy of their users. The issue would not exist if people paid for their search service or for their social network, which would remove the advertiser from the equation and let the company focus solely on delivering the best product for the user, but as this isn’t the case, we are left in a situation where the interests of one party are compromised for the interests of another.

There are also the really obvious dishonest design decisions used in social games like that of Zynga, whose interests lie in promoting the product in order to pull in more users rather than actually making a good product. For example, they have a dialog prompt with only one button10 that says “Okay”. The dialog asks the user whether they will give the app greater access to their Facebook timeline, i.e. let it make posts on the user’s behalf, but there is no option to close the dialog, only to agree with it.

Upon clicking the button, the actual Facebook permission box pops up which lets the user decide whether or not they wish to give these permissions to the app, but because the previous box has already conditioned them to agree, they are more likely to simply click “Okay” again in order to proceed, rather than stop to make a conscious decision.

Manipulative Zynga Prompt
A manipulative Zynga11 prompt. The two buttons, “Accept” and “Cancel”, are about sharing a message with your friends, but the wording makes it seem as if they are to do with accepting the reward itself.

On the one hand, the designer is tasked with creating an informative dialog box meant to help the user make a rational decision, on the other, they are tasked with creating a dialog box which will manipulate the user into acceptance, and because they are not committed to delivering the best service they can for the user, they pick the latter. The interesting thing with Zynga is that they actually do make money from their users, but they do so only from the small percentage12 who pay, not from the whole user base. This means that to make money they have to capture masses of users, like dropping large fishing nets into the ocean to catch the few “whales” (the term used in the industry for large spenders) along with a pile of bycatch.

Lastly, consider all the online blogs and magazines that cram their pages with ads leaving no room for the content, and also the content itself, which takes the ever more sensationalist nature by the day, its only purpose being to bring in more page views, not to enlighten readers. For example, The Huffington Post split tests headlines13 to arrive at the one that brings in the most hits, thereby trading the experience and judgement of the author for the impulses of the masses. Because the reader is not the one paying, these sites hold little loyalty towards them, leading to design decisions that optimize for page views and ad clicks rather than for the creation of the best possible reading experience. Such sites also like to introduce design tricks like pagination, the goal of which is to once again boost page views, while they try unsuccessfully to convince us that clicking multiple times on a set of small page links somehow leads to a better user experience.

The conflict of interests that arises naturally in free products derails the designer’s core goal of making a great product, that is, a product that aims to fulfill its primary purpose of satisfying the user as best as possible. Loyalty to multiple parties with disparate goals is impossible, which leads to friction in design decisions and in the soul of the designer, forcing them to make dubious compromises in their work. Each small compromise doesn’t seem like a big deal, a little manipulative form box here, a tiny breach of privacy there, but remember that the final product is the sum of its parts, and so in the end, the multitude of small compromises add up into a substantial whole.

If Compromise Isn’t An Option, Free Is Not A Solution

A compromise is a concession on the part of all the parties involved, not just some, and you cannot compromise on principles without destroying them altogether. For example, there can be no compromise between truth and falsehood for you cannot make something just a little less true. In the same way, surrendering your users’ privacy or manipulating them into taking an action for your own gain is to surrender your honesty, and in turn, a part of the moral foundation upon which your work is built.

Whenever you feel a tension in making a design decision that you think is caused by a conflict of interest, ask yourself exactly what compromise you’re asked to make. Are you asked to make a fair concession between one party and another from which both will derive benefit, or are you asked to take something from your users without their permission, or make them do something they have not agreed to do? Are you asked to make a decision that will compromise the integrity of your work?

Faced with this dilemma, what do you do? The answer is simple, and is the very thing you should have been doing all along: charge money for your products. By selling your work instead of giving it away for free your interests and those of your customers — who are no longer just users — are aligned: they provide you with the compensation for your work, not some outside party, leaving you free to focus on delivering the best product, for them. This is not only moral in that you no longer have to compromise the interests of one party for those of another, it is also a much simpler solution. You make a product and sell it directly to the customer, no need for other parties, nor conflicting interests, nor dubious design decisions.

App.net14
App.net15 proclaims ad-free social networking in their banner. Because the membership fees are placed right next to it, the user never wonders where the catch is.

It works, too. A great example is the App.net161 project which I’ve mentioned at the start of the article. Its creator, Dalton Caldwell, wasn’t satisfied with the way Twitter was treating its developers, so he set off to create his own micro-messaging service, with the difference being that this service would be paid for at the outset by its users and developers. Caldwell set a minimum of $500,000 for his fundraising month during which people could sign up for a year of service to a product that didn’t yet exist.

In just a month he raised over $800,000 and has launched an alpha version of the service. His critics have been saying that nobody would ever pay for a Twitter-like service, but clearly there is enough value there for some to sign up for a paid alternative. It is far too early to judge the future of the venture, but the initial fundraising success shows that people are prepared to pay for services they care about, even with the presence of free, established alternatives.

Charging For Online Content Works

On December 10th 2011, the stand-up comedian Louis C.K. decided to release his full-length special Live at the Beacon Theater on his website as a DRM-free download for $5. Two weeks later, sales from this self-published special exceeded $1 million17. The download was DRM-free, meaning that people could easily pirate it, but given the fairness of the price and the package that route just wasn’t worth it. Yes, not everyone can re-create the success of Louis C.K., but that’s not the point. Of course to drive product sales you need to generate enough excitement and interest — that’s the job of marketing. The point is that selling digital goods on the Web is possible, and, when you have something people genuinely want, can be very lucrative. The success of Louis C.K. has since inspired other comedians18, namely Aziz Anasari and Jim Gaffigan, to adopt a similar distribution model.

Last year, The New York Times put up a paywall around its online articles. The paywall allowed visitors to read 10 articles a month free of charge, but required a paid subscription for subsequent access. The implementation of the wall was very porous, meaning that it was very easy to get past it with a variety of simple steps, and so many critics believed that people wouldn’t be fooled into a paid subscription. Just four months after the implementation of the paywall, 224,000 readers19 have already signed up to the paid subscription, not far short of the company’s goal of reaching 300,000 subscribers within a year. Combined with sign-ups through other channels, such as Kindle and Nook subscriptions, the total of digital subscribers rose to around 400,000. Although this number still makes up a small portion of the newspaper’s revenues, it highlights healthy growth and proves that charging for online content can work, even in the face of everyone else giving theirs away for free.

The New York Times Paywall20
The New York Times21 paywall prompt. Even though there are simple tricks to get past it, many people still prefer to pay for their content.

Other newspapers like The Wall Street Journal and The Economist successfully use the same model by keeping most of their content accessible only to paid subscribers. When you charge your readers for content, you no longer need to run after page views by creating sensationalist work, nor does your website need to try and squeeze ever more page loads out of each visitor through design tricks like pagination. Once your readers have subscribed and paid, they’re going to read what you have to say no matter how attention grabbing or plain your headlines are, freeing your authors and journalists to focus on creating work that enlightens your readers, not shallow content designed to spread.

For an example of design related publishing consider the success of Nathan Barry and Sacha Grief, whose two eBooks combined have made them $39,00022 worth of revenue — and are still selling. Bloggers like to give away their experience for free, and while this is great for the readers, it doesn’t help pay the author’s bills. Some put up a few ads on their site, but unless they consistently generate a lot of traffic, the revenue generated by the ads won’t amount to much. Instead of chasing after advertising pennies, why not package your experience into a book? If your audience is tech savvy, you won’t even need to print the book — just offer a DRM-free eBook package that your readers will be able to consume on any device of their choice. The success of Barry and Grief shows that people are ready and willing to pay for good content, you just have to give them the opportunity to do so.

As for an example of well implemented advertising, consider The DECK23 ad network, which includes some of the top tech sites around the Web like the Signal vs. Noise blog from 37signals, Dribbble, Instapaper, A List Apart and many more. The ad network uses a very unobtrusive 120×90 pixel banner, with a sentence or two of text underneath. Its small size shows respect for the end user by keeping advertising within strict limits. It’s a subtle way to advertise which has inspired other networks to offer the same format, such as AdPacks from BuySellAds. This small format won’t work for everyone — most of the sites that use The DECK rely on other sources of revenue — but it is a good way to deliver a cleaner experience for the user while still providing an advertising channel.

Summing Up

Free products themselves are not the problem. We give gifts all the time and the giving of them to the people we care about is reward enough for us. The problem is the giving away of free products and services while still expecting compensation. If the compensation does not come directly from the user, the developer proceeds to extract it by other means, which usually involves bringing in other parties to the table, leading to a conflict of interests. When the interests of the user and the product maker are not aligned, not only do you get a neglect in the feature set, but a product of a wholly different nature. The conflict is not just external, it exists inside the mind of the designer, and a battle is fought every time they are put into a situation where they have to limit their full creative potential by compromising the interests of the user.

It doesn’t have to be this way. People will pay for design and content created to serve them, not to exploit them. People have paid for centuries, and they will continue paying for goods and services that give them value. Instead of picking the path of free design, take the road of moral design — design firmly based on the moral values that guide your life and your work. By turning your users into your customers you eliminate the conflict of interests and thus free your mind to work fully on the problem at hand, and any compromises that you make will be real and fair compromises, that is, design judgements that improve your product by taking it in the direction you want it to go, not dubious choices that surrender your values, limit your creativity and cripple your work.

(vf)

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Dmitry Fadeyev is the creator of Usaura, a micro usability testing service, and the founder of UsabilityPost, a blog about good design and user experience. Additionally, you can read his thoughts on design, art and practical philosophy over at his personal blog.

  1. 1

    First off I’d like to say that this was a great and interesting article, nice work!

    But please don’t make the assumption that you can charge for online content based on the outcome of NY Times pay wall project. One could argue that their strategic move have been very unsuccessful. Turning 21 million visitors per month into 130 000 paying subscribers meanwhile the number of daily paper readers drops from 570000 to 397000 is not a success story and it’s certainly not something you can base your conclusion on.

    I don’t say that it’s impossible to charge for online content. I’m only saying that the conclusion, that you can charge for online content, feels unfounded and somewhat far-fetched based on you analysis.

    (http://www.svd.se/kultur/betalstrategin-som-slog-fel_7560644.svd is the source on the numbers (highly respected swedish news paper in Sweden) but you can google it and find the numbers as well)

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    • 2

      Thanks for your comment Vic.

      Are you sure about the 130,000 number? In March this year they’ve reported 454,000 (source: http://www.businesswire.com/news/home/20120320005778/en/Year-Digital-Subscription-Launch-York-Times-Media), though this is a combined number for NYT + Herald Tribune, and includes eReaders. You mention that the number of printed paper readers is dropping significantly. As this happens, NYT has two options: push for more traffic to increase advertising revenue or try to get money by selling subscriptions. The former leads to degeneration of content, the latter to remaining the paper they they always were.

      The NY Times example to me is especially interesting because of how much resistance it faced. People were used to getting this content for free and didn’t think the paywall would work, especially that it is so easy to bypass. Others like WSJ and Economist are also closed, but they were never really open like NYT so I think a little time has to pass before the brand moves into that same group of paid papers, removing the perception that the Web edition has to be free. Additionally, even though the number of lost paper subscribers is greater than the number of gained online subscribers, the economics of online publishing are different: there are no printing costs and the distribution costs are much smaller. This means they can get by with a smaller overall number of digital subscribers, which is likely what they will have to settle on in the long run.

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      • 3

        First, very good article Dmitry.

        I think giving an Opt-In option to users for premium subscription is a better way. e.g. NYT can show ad-supported articles at the same time can give a no-ad premium version of their content with batter usability and some extra features. This would entice new users to get subscription but at the same time their user-base would not drop.

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  2. 4

    Very interesting and inspiring!

    I personally think you are right about the moral issue of giving something for free when you’re actually expecting something in return. However… I believe giving a gift (to someone we do or do not know) is not always based on getting emotional compensation. People can give without expecting anything in return if they have a goal bigger than themselves. For example: If a father gives his son a bicycle for his birthday and his intentions are not to get emotional compensation, but to see his son happy, he wouldn’t mind returning the bicycle if his son is unhappy with it. But if it’s the other way around and the father is only giving the bicycle, because he wants the affirmation of his son, he will get angry and/or disappointed if his son doesn’t like it. If the son knew the gift of his father was genuinely for his happiness, he will respond automatically with emotional compensation, whether he likes the gift or not. If he sees the father is only giving him a bicycle, because he wants something in return, he knows he has been deceived and he will feel angry and/or disappointed. And yes… in that way, the father could better have been honest from the start. The only way people give emotional compensation is if they knew the gift was unselfish.

    In short: It comes down to what’s the bottom line (and multiple bottom lines can go hand in hand). This makes the moral issue of ‘free’ more understandable and in my opinion will not “limit your creativity and cripple your work”, but motivates you to be more creative and let your work flourish if your goal is bigger than yourself.

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      Michiel,

      I think you are missing the meaning of “emotional compensation.” What I surmised from the article is that the author was referring to one’s own emotional responses to giving a gift, not the emotions that are returned by the recipient. It is akin to the emotional response when you check tasks off your list. The act itself is the reward, not the response from others.

      Great article Dmitry! Really got me thinking!

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      • 6

        Well, to me a compensation is getting something back in return. If we do not want anything in return our choice is not based on compensation, but on the act itself, which is selfless.

        “Sometimes we choose to work for free, in regards to money, but that choice is always based on some other form of compensation. When we give someone a gift, we receive emotional compensation in return because the action of giving a gift satisfies our desire to please someone we care about.”

        The accent here is on one’s own desire, that is to get compensation. We like doing selfless things because they make us happy, but if we do selfless things in order to make us happy, the act isn’t selfless anymore, thus not making us happy.

        I don’t think I’m missing the point of ‘emotional compensation’, but I’m considering your interpretation of ‘emotional compensation’. This doesn’t mean I’m saying the article is wrong or your opinion is wrong.

        Besides… I think this article is really good. The fact I am replying is just to comment my opinion on a great and wise article.

        -1
        • 7

          Thanks for the followup, I appreciate your thoughts Michiel.

          “We like doing selfless things because they make us happy, but if we do selfless things in order to make us happy, the act isn’t selfless anymore, thus not making us happy.”

          Happiness is not the only motive, but all good motives focus on a creative action that benefits you in some way (not necessarily in material wealth), not a destructive one that harms you. Moral values are only values because they are valuable — to you. You may say that they are valuable to something higher, like society, but the only reason you care about the health of society is because it is benefitial to all, including you. A selfless act that does not benefit you in any way, i.e. an act done against your will, is destructive, and thus, cannot be moral. This is a semantic issue, which is why I would not dwell on terms like selfishness and selflessness here because both can be either benefitial or harmful when taken to extreme, and so their meanings differ depending on the context.

          Unless you’re forced to give a gift, it is done of your own volition and you receive a certain satisfaction in doing so. How your gift is received doesn’t really matter. In other words, whether you experience gratitude or not is up to the recipient, not you, and so out of your control, but the act itself is enough for you. I think we do not disagree, just talking about it using somewhat different terms.

          2
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      Thanks for your comment Michiel.

      You say: “If a father gives his son a bicycle for his birthday and his intentions are not to get emotional compensation, but to see his son happy” — but what is this “to see his son happy”? Seeing his son happy is exactly what emotional compensation is for it is a joy for the father to see his son happy. It’s not a trade in the sense of him expecting something in particular from his son, it’s an action that brings with it its own reward. In the same way that building something with your hands to satisfy your own desire brings with it its own reward, so is the giving of the gift, the action being an end in itself.

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        I have a follow-up question to the whole “emotional compensation”-thing: You only get emotional compensation if what you are doing, satisfies you, right?
        In the father/son-example: If the son does not like the bicycle, the father doesn’t get emotional compensation. (If he still does, he might be a saint.)
        In the “making something with your own hands”-example: If you start out to make something beautiful and end up with something that’s not – you don’t get emotional compensation either. Personally, I am disappointed if I spent hours on something (a meal, a gift, a project) and it doesn’t turn out the way I pictured it.

        Great read, by the way!

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  3. 10

    First, thanks for your research and thoughts.

    I just stumbled upon a new project of the founder of Instapaper: http://the-magazine.org/ tries, starting today, to bill readers for in-depth articles about technology et al. Didn’t catch the USP in this short time, but for sure there is another player trying to “avoid the pitfalls of free” by offering subscription-only content.

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  4. 11

    There are poor interpretations representated as fact in this article. I got to the second one and decided to zip to the comment form.

    “Twitter doesn’t make money from its everyday users and developers, and thus does not hold any obligation towards them.”

    That’s just not true. It’s user base is critically important. If it alienated it’s user base based on decisions directed on making advertisers happy – then the user base will drop and the value of it’s service does as well. Therefore, the happiness of it’s users with it’s service is DIRECTLY tied to it’s ability to make money.

    “Developers of today’s free Web apps and sites do not know their users well enough in order to give away their work as a gift.”

    Most developers I know, including myself, absolutely go nutso when they see people using the things they create – and that is compensation enough. If I could create a service that actively engaged 1,000 people, I would gladly give it away for free – let alone 1 billion. (The thing is though, as soon as a service starts to gather a following, the developers immediately think, ‘we’ll just stick some ads in this thing and it will pay us enough so that we can keep developing this service and even more people will use it’ – but that concept requires a whole other discussion).

    App.net has a bold vision, and I applaud them for having the courage to try and upend the industry with a different type of paradigm, but I honestly think they will ultimately fail. The reason? People are cheap.

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      On Twitter: I did not say that the satisfaction of their users has nothing to do with the success of the product — of course it does — only that they do not hold an obligation towards their users and developers, which they do not, being neither contractually bound nor having made any promises to them. There is a difference between cause and effect and actually working for your users. It takes two sides for a conflict of interests to arise, and that other side is the interest of the users. If it wasn’t important, there would be no conflict.

      “Most developers I know, including myself, absolutely go nutso when they see people using the things they create – and that is compensation enough.” – And it is a great thing that you and others do, but this is not universal and especially not so for services that take money to run. The developer cannot sustain a free userbase indefinitely.

      “People are cheap.” — Some are, not all. You don’t need to capture a massive audience when you charge for your product to make it successful. App.net will likely not overtake Twitter in popularity, but it need not do so.

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  5. 13

    Thanks for your article.

    You have made an interesting analysis but I have missed your point somewhere.

    In creating websites you might have different target users with different interests and the design needs to fit all their needs. Some companies will do better and some others worst. At the end, it is about prioritising and finding a balance in the design. Isn’t this what we do in our daily work? I understand this challenge as part of our competencies.

    Finding a balance doesn’t need to be unethical, is just trying to have the design that will make you the best return of investment in the long or short run. Executives get paid to take this kind of strategic decisions too.

    When you say that, the issue would not exist if people paid for their search service or for their social network, it is pretty obvious but a marketing strategy goes far beyond. Companies are here to make money and a company might decide to offer a free product to get income in other ways as you mentioned. There is no problem about this and design decisions need to offer a good product and get income at the same time. You need both to survive.

    If you can make your users pay for content or features thought for them without any other interest leading the design, well, good for you, well done. But do you think Twitter would have success if we ask for a fee as from tomorrow? And what about FB? Users will prefer advertising instead definitively and I personally don’t get annoyed when I see sponsored google ad.

    Another issue is the use of evil usability which you mention (like the Zynga example or Ryanair’s checkout process). This is unethical and time will say if the strategy works or not. But let’s not mix this with the main point of your article, these are different issues.

    To sum up, compromise is always a solution and free is just a marketing strategy as good as others. That will depend on the product and on the company.

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      Thanks for your comment David.

      There’s a big difference between a real compromise in which you balance the interests of various parties to arrive at an outcome that is benefitial to all, and compromising your integrity by surrendering moral values like your honesty by implementing manipulative designs or giving away the privacy of your users. The former is about managing constraints, the latter is a path to bad design. My point isn’t that free products are all bad and unethical, it’s that giving away services for free while still expecting compensation fuels a force that pushes the designer towards the latter form of compromise.

      You ask whether Twitter could be successful if they asked for money tomorrow. Well, App.net, their competitor, did just that, and raised over $800,000 in just a month. Yes, some people will pay for a service they value. Of course the audience will not be as large as that of a free product, but it really comes down to the fact that if people aren’t willing to pay for your product then it isn’t valuable enough for them. Another thing to consider is that Twitter’s main business model (ads) is still in beta, so we cannot yet judge how successful their business really is. So far, most of their capital came from investors, and that revenue channel won’t last forever.

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    Great article Dimitry! I think that a paid model is absolutely the way the industry is turning and is the only way to pick us up from the advertising sinkhole that is now the Internet.

    One question I have though, is how can we limit access that much? Certainly, every content publisher with something useful to say and a modest audience is entitled to some sort of monetary compensation. And yet, we can’t have every site on the web behind a paywall. How many different sites can we expect a user to pay for, even if its only $5 a month or less. The web has always been free and open, and that has been its strength. Limiting access may solve the problem for publishers, but it doesn’t necessarily scale well and will be too much for your average user. It would be impossible to manage that many subscriptions to your favorite site, even if we took the NYTimes route and made some content available for free.

    I’m interested in what you think you’re average site should do. Writing an ebook might be a good route, but even that can be a hard model to sustain.

    To me, there are a couple of options. The first is to set up more networks of sites, so that lots of small blogs can get together and offer all their content for a certain subscription. If a bunch of sites in the same niche got together, this could be very appealing. It would also be easier to provide more content for free.

    But more importantly, I think that Internet Service Providers need to play a part. Is there a reason that we pay our ISP for infastructure but not for content? When we pay the cable bill, we are paying for both, and premium channels like HBO have even gotten away without intrusive ads. So shouldn’t the ISP’s be providing some sort of compensation to the content providers of their service? Because, of course, the Internet has never been free. We just haven’t been paying the right people.

    Wondering what your thoughts are, but thanks for the truly insightful article.

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      Thanks Jason.

      The problem is that we’re so used to free content being everywhere online that the idea of paywalls now appears alien and unwelcome, but this was always the norm before the Web in the age of paper and ink. You paid for what you read. Magazines and books are for the most part very cheap, and so the limiting factor in how much you consume is more to do with how much time you have available rather than how much money. I’m not saying those times were better, just that we got by well enough.

      That said, I agree that the Web is different, and free access to information is incredibly empowering and benefitial in many ways. The thing is: the Web is an amazing distribution channel, and even if the content is placed behind a paywall, it is still accessible for those who care to get it. If most publications were paid, people would actually be more picky about what content they consumed, looking to invest in something that develops them rather than merely kills their time. It might slow things down a little, but that might not be a bad thing.

      I think the biggest barrier is actually ease of use more than anything. Apple has solved this with the iPad. They have your credit card on file so all you have to do is click on a buy button and type in your password to subscribe to a digital publication. If I see an article I want to read and the publication is priced at, say, a couple of dollars, then it really is a no brainer. Unfortunately for a small publication micro transactions are very expensive, but if they charge more for a longer time period, it becomes a bigger barrier for the potential customer. I agree with you about the idea of site networks that can share premium content between them. I think that is an idea that could work.

      I also think eBooks are very viable, and they are certainly not going to go away any time time soon, especially with the decline of their paper siblings.

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    I whole-heartedly disagree. Not with your hypothesis, but with your premis. You simply aren’t going to find any large number of people that will pay for an online service. Everyone is on Facebook, which is why everyone uses Facebook. Same with Twitter and now with Pinterest. It’s very difficult for anyone to want to register for a service or content, let alone pay for it.

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    • 18

      @Cara

      If you want to reach critical mass above your competitors than you give things free to users and accept advertising and other forms of payment to cover your costs.

      However, as this article pointed out, you may have to sacrifice user or developer happiness and experiences to achieve your goals.

      So in the twitter model, your users are only as good as they are profitable. So each user really is a cost to Twitter to host their rambling tweets, but they hope to make up that cost by finding advertisers who will pay Twitter to push their messages on you.

      So Twitter compromises on user experience a little bit by adding annoying “in-stream” advertisements. Some would claim its worth the costs due to getting a free service like Twitter and some may agree with this route, but this model is not for everyone and can affect design/development decisions immensely.

      Some companies prefer to have paying users in which the company can focus their entire attention on and provide a fully positive experience rather than any potential negative ones. So with many of these types of services, you won’t see advertisements or other forms of potentially deceiving money schemes to cover the costs of the application because it is already built into the monthly or yearly cost the users pay.

      So although Twitter might make more money than some of these smaller companies who use a per month/year fee for users, user satisfaction will probably be higher for these smaller companies due to users being constantly involved in the decision making process. If these smaller companies don’t satisfy their users, they don’t get paid. If Twitter doesn’t satisfy some of their users or developers, they have a few million more to rely on to keep them going to convince advertisers their network is worth it.

      Of course Twitter has to try and retain users as much as possible too, but it would take a significant amount of people quitting Twitter for them to really notice the affects of annoying them with advertisements and change their decisions of in-stream tweets. My guess is most people live with it because they have no other choice for micro-messaging and because Twitter is the most popular choice.

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      • 19

        Of course, when you are already offered something free through Facebook, Twitter or Pinterest, the user also feels a sense of entitlement. Because those platforms are targeted toward having a large user base anyway, a free offering makes sense.

        Last.fm used to have a better subscription service. Paid users could listen to their loved tracks, listen in their car, etc. I paid because those extras seemed worth it. When they took many of those services away and offered less services because of music industry regulations, I felt like I was no longer receiving the value I had chosen to pay for. When you give something and take it away, you fail to meet user expectations and make people upset.

        If you charge right, from the beginning, offering packages (maybe even a free one in there), you are more inclined to get the right users and their loyalty. Mailchimp is a great example.

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    Good article, and interesting read.

    I agree with you to a certain extent, however I feel you’re perhaps being too subjective on the matter and not looking at the whole picture by taking more factors into consideration.

    I’m very surprised you did not look more closely at Facebook within this article, as to me, they are a pinnacle example of this argument being implemented in the real world. To an extent, I feel Facebook have bridged this gap between satisfying their users and their compensation requirements rather effectively, and have taken design into consideration. Their advertisements are tailored to their users and are relative to their interests, which ideally benefits both their users and advertisers. Of course this concept becomes muddied every so often, but the general concept is interesting and something which I feel could be beneficial if utilized correctly.

    Let’s also take Smashing Magazine as an example as well, as they fall into this category rather perfectly of trying to find compensation for their hard work whilst also satisfying their user base. Advertising plays a large role here, by the looks, yet I feel they are not doing their user base justice. The advertising does not seem to be tailored to the content being viewed. I am reading articles on advanced web design, or user interface design and being swamped with cheap and nasty website creators on my screen. This confuses and frustrates me. I feel advertising more helpful, beneficial products/services which are more relative to the articles being presented would not only benefit Smashing Magazine, but also benefits its users by offering them more relative content.

    These are just two examples, picked for obvious reasons. Google also does well to tailor their advertising, so whilst keeping their services free and shifting the monetary losses to the advertisers as opposed to their users, they are also keeping their service relative, interesting and overall pleasant.

    Side note, spelling mistake: “compromising design ecisions”

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    • 21

      I’d also like to touch on the Facebook privacy issue. I can see that being a major factor in this discussion of tailored advertising, as Facebook requires some personal information to tailor the advertising appropriately.

      Personally, I was and am fully aware that signing up to this essentially public website and offering them any details about myself that I see fit, was not going to remain completely private. I am more than happy for Facebook to use my interests and likes/dislikes to provide me with a more interesting and stimulating experience. I am not going to put information onto a publicly trading company’s website if I want that information to remain absolutely private. People who provide Facebook with their personal information must be aware of said implications.

      Ultimately, I do not have a lot of information I wish to keep private/hidden in my life. But if I did, I surely wouldn’t be putting it onto a social media website. You are, after all, willingly offering Facebook your information.

      A website like Smashing Magazine (SM), however, does not need to delve into the realm of privacy issues as it controls the available content. It would be very easy for SM to alter/tailor the advertisements on pages to be appropriate for the users.

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    A couple of comments – firstly, a significant amount of open source development is actually paid-for work, performed by people working at companies.

    Google have a financial motive behind Android and WebKit, Apple also had a big motive in contributing to WebKit, and similarly for the other open-source projects they support, like Clang. But the same applies lower down the scale (Django, RubyOnRails).

    Of course there are projects that are pure fun / community driven too – just wanted to emphasise how much open source software is commercially developed.

    The other is that I think your article is timely – I think people are waking up to the fact that there is no such thing as a free lunch, and becoming more sceptical about investing effort on platforms that haven’t made clear their business plan (that’s you, Pinterest. Love your site, but I don’t want my nicely curated boards ruined with adverts).

    What’s interesting is how few people offer both options. Not everyone can afford HBO, but there is a significant market of people who can and do (see also the reversed decision on forced adverts on the Kindle Fire. Lots of us are willing to buy our way out of advertising).

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  10. 23

    Two Points:

    1) People like advertising, especially when it relates to a website/publication’s editorial mission, e.g., clothes ads on a fashion site; appliance ads on a home design site.
    2) Ads rarely disappear for long on paid sites–the profit motive always wins out. Look at what happened with cable TV: First, the fees were small and the ads few and far between. Now the fees are high and the ads as frequent as they are on the free network channels.

    Yes, there are moral choices to be made, but it is up to the publisher to determine the method and model that will best serve the reader and pay the bills.

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    A good albeit debatable article.

    Not delving into the facts and figures, I strongly believe that the culture of free software is detrimental to the development as a profession.There is a need to find out “ways (not one way) ” to monetize the web content. Here are my reasons :

    1. One thing I don’t understand is why people expect to get free software services. All the cry about making the web software/content free seems very unsound and unhealthy.A software developer needs to be duly compensated for the amount of time and skills he i investing in a particular product. After all, these are not made by Aliens who don’t have an affinity to the earthly possessions !!!.
    In the real world, ethics and codes exist, which makes people to compensate for the services they are using. No one has a qualm regarding that. But in virtual world most of the people take the software for granted without realising the amount of time and skill invested in ti.

    If you are an architect, people expect to pay for a design drawn.Just imagine an architect saying that instead of the fees, he would hang some advertisement boards on your house.
    Would Microsoft have still existed had Mr. Bill gates given out the free windows, relying solely on advertisements for income?

    The problem is the huge inconsistency between the real world social ethics and the virtual world’s stress on making more and more free software. Either one of them has to come in line with another in order to prevail harmoniously.Either the whole real world systems needs to dramatically change in favour of free skills and services or the virtual world has to monetize services on par with the real world ones.

    2. Proper monetization of the web content/software will also ensure that there is a proper, responsible usage of resources.

    3. That in turn, would create highly customised and efficent experience to the user ,with developer not thinking about how to pay his rent all the time.

    4. There is a need to develop certain ethics and moral responsibility on the part of the user, who enjoys the services free but finches at the mention of compensation.

    Summing it up, proper alternatives need to be developed for the monetization of usage of web/software resources, in order to make the user experience richer and prevent this profession from dying.

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  12. 25

    Very strong article.

    When people pay for goods and services, versus getting it for free, the vendor has the opportunity to earn loyalty and respect.

    It is very easy to get free music. Spotify’s subscription-based service is something I will choose to pay for over downloading because they offer a service that makes sense to me (and is actually brilliant), at an affordable cost. I paid for last.fm (when the service was better) and now Spotify has drawn a very large and engaged community.

    When I had my first personal client (http://erinelisse.com), I made the mistake of charging them too low. They were already impressed with me (I essentially had the job), but I wanted to use their work for my portfolio, so I gave them a lesser number. I thought I was doing them something so nice. But, of course I lowered their respect for me, and they continued to ask for more, for less. This wouldn’t have happened if I’d just charged a higher amount. Lesson learned.

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  13. 26

    Good article but I cannot agree with this statement: “When you charge your readers for content, you no longer need to run after page views by creating sensationalist work, nor does your website need to try and squeeze more page loads out of each visitor through design tricks like pagination. Once your readers have subscribed and paid, they’re going to read what you have to say no matter how attention grabbing or plain your headlines are, freeing your authors and journalists to focus on creating work …”

    It sounds like the writer is saying that because readers are being charged, the creative team doesn’t have to work as hard. Nothing could be further from the truth. No they will not just ready anything you post. You still have to captivate and draw the user in to want to come back day after day, to want to renew their subscription after 12 months or 30 days. One reason the New York Times and Wired have been so successful in digital subscriptions is because obvious attention to details have been taken in design and layout. Not all the articles are great, but they are presented well. They show or present the reader with more than just words on a page.

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    • 27

      Thanks for your comment Red. I am in full agreement. Perhaps my wording was unclear. What I meant was that your content will no longer be at the mercy of magnetic headlines and sensational content, which page view driven journalism is. Taking this away you will obviously still have to produce great content if you want to keep people reading, but without the headache of winning pageviews you will get the chance to focus on higher quality articles that are thoroughly researched and offer deeper insights rather than the sort of article that is meant to attract clicks but not readers. People will subscribe to the brand and will read your articles on the trust that you’ve won, not because of a catchy headline.

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  14. 28

    Simply put: Awesome article! :)

    This article leverages my head to think a few things today while working on the Business Model for one of my projects.

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