The end of the Internet of “everything free”

  • 40

Not so long ago, we all had a Hotmail. With a whopping 2 MB of storage. Then Google came offering 1 GB of free email and after accepting that it was not a joke, we gave ourselves to their cause. And so online services continued to flourish, all with free service as a cover letter. Nowadays we all buy online with the same naturalness with which we brush our teeth, but In the 2000s, a website asking us for a credit card was a major issue and not acceptable to everyone. Everything had to be given for free.

Financing came from online advertising: yesterday glory, today survival. The CPM (“cost per thousand”, a standard unit in advertising to determine the cost of a campaign for every thousand impressions of its ads) has sunk over the years.

The future of money will be digital.  But only when states and central banks allow it

In the late 1990s and early 2000s I was on fire, both because we were still looking at banner as because those who put the money felt that advertising on the Internet was a plus for their reputation, it was part of the brand image they wanted to carve, and that was paid so well that allowed to offer anything for free.

Today that story is different: the CPM has sunk compared to fifteen or twenty years ago, the audiences needed to stay alive are much larger, social networks and online entertainment platforms came into play, and also the importance of Google as a search engine .

Venture capital and subscriptions

Credit card with the Xataka logo

The years after boom of the free were those of the rise of Silicon Valley, with doped companies with trucks full of dollars allowing themselves to continue offering free products at the cost of living on the investment until we’ll see when.

Dropbox allowed itself for years to have a critical mass of users who entered at the cost of free storage promotions with the purchase of any mobile phone, or by inviting other users to the platform, and that was enough. Even traditionally paid software became free: this is what Apple did with macOS or Microsoft with Windows or Office, whose business model was accentuated in the sale of hardware, subscription environments and, in the case of Redmond, corporate services.

Getting into debt is today faster and easier than ever: a financial time bomb that is about to fall

Then the story began to change. The former startups had to worry more about their finances, and the big technology companies took advantage of having made us captive of their platforms, such as Google Photos or Dropbox, to end the grace period and start charging us without much choice. A variant of ikea effect: it pays me more to pay a few euros a month and not have to rebuild my playlist and online file system elsewhere which may bring me to the same point in a couple of years.

Even the media, especially the generalists, one of the last professionalized redoubts trying to squeeze the advertising business at the cost of free for their readers, have ended up making the leap to paywalls. Social networks, others that dance, have also incorporated models to scratch a few euros beyond advertising. Twitter with your Super FollowInstagram with new methods for influencers not-so-big. YouTube enabled paid subscriptions and Twitch, ingenious to monetize, is killing.

The Internet of “everything free” feels old and far away, like blowing a cartridge or rewinding a tape with a cassette

Even the download of content, such as movies, series and music, has also plummeted. The arrival of comfortable services with reasonable prices will be the main cause, but above all in video there is content fragmentation, and despite this we live with the idea of ​​paying for more than one video service at the same time, or alternating with the passing of the months It’s the market, friend.

In fact the move from one-time-purchase-based marketplace to subscription-based environments It has been the key that has unlocked what not so long ago seemed like a chimera: (almost) all of us checked out. Subscription fatigue is real, but the same has happened with every booming model: there comes a moment of saturation that gives way to self-regulation. Whoever abuses the model ends up being expelled by users who turn their backs on him.

Now the only thing missing was the recession, which in addition to sinking the market capitalization of many companies, including technology companies of all sizes, and even cryptocurrencies; it has also scared away venture capital, which has contracted or paralyzed its investments in this first half of 2022. Which means a maturity of startups, now forced to present current billing, not future projection. End of the stage in which the important thing was the runaway growth. The relevant thing is again the sound of metal. Another argument to avoid the free model everywhere.

In the meantime, we remember that Internet where it was taken for granted that everything was free like someone who remembers things that no longer exist, like blowing out the cartridge or rewinding a cassette with a pencil. It is another time.

In Xataka | The best 16 pages to download free books for your Kindle

Not so long ago, we all had a Hotmail. With a whopping 2 MB of storage. Then Google came offering…

Not so long ago, we all had a Hotmail. With a whopping 2 MB of storage. Then Google came offering…

Leave a Reply

Your email address will not be published.