The Danger of Free

Everyone loves to get stuff for free. We line up to get a free drink, we sign up for free checking accounts, and we're happy to get a free gift with the purchase of our next car. We love free stuff, even though we all know and understand that free is an illusion. After that free drink, we pay for the next three. The bank is making money by investing what we put in that checking account. The car dealer can afford to give away a small gift because the profit on the car is large. But none of this seems to bother us - free things still have a certain allure. But is the concept of free taking us down a dangerous road?

Marketers long ago figured out the attractiveness of free. For decades companies have been playing tricks using free to lure naive customers. But recently, our obsession with free has given rise to a new phenomenon - where the customer is never asked to pay. How? Because the business makes their money on advertising. Marketers are happy to pay for access to customers, who in turn love not having to pay. So the web plays the glorious role of middle man. Are we heading into dangerous territory? The paths that we are taking lead to confused customers at best; and monopolistic practices at worst. A culture where consumers think that increasingly more and more services should be free is not healthy.

Does Free Make Sense?

Most online consumer services today are free. That is, people pay nothing to use them and the services make money via advertising. The logic is that the more people who use the service, the more page views they generate and the more ads they are shown - so the happier the advertisers. On the surface this makes sense. After all, newspaper advertising has generally worked this way as well. Well, not quite. Top-shelf papers like New York Times, are not free - you need to pay to get them.

The classic newspaper business is both a subscription service and advertising supported. Subscriptions provide a solid base, and grow if the publication is interesting. Ads are then sold door-to-door by a salesperson with a with a fat rolodex and phenomenal commissions.

But this classic model is no more. In the brave new world, subscription fees are gone and the salespeople are replaced by CPM advertising engines. The problem is, things are just not that simple. When the economy is bad (think 2008), then advertising is the first to be cut. Now if your sole revenue source is advertising, then your revenue gets hit hard. The traditional subscriber base, which helps companies navigate through the economic downturns, is just not there, because it is no longer cool to charge people for the service.

The second problem is, of course, Google. The whole beauty of online advertising is that it is trackable - ROI is easily measured. Google's pay-per-click model (CPC) is far superior to the traditional impressions based (CPM) model. But how many other companies can mimic that? Can the New York Times sell CPC advertising? That remains to be seen. And Facebook is yet to prove itself in that game as well. Getting people to click on ads is still a rocket science on the web.

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I am all in favor of re-labeling these "free" misnomers.
"Ad-sponsored" to Google services, and things like Hotmail and Yahoo mail.
"pre-paid" for things like IE, WMP, and packages Apple includes with OSX.
"gratis" for things like trial/shareware, where you pay nothing, but have restrictions on duplication or use.
"libre" for things like BSD/Linux where you are free to copy, install, modify (including source) and use in any way you see fit.

Until then, the term "free" will be vague and nebulous. :P

Interesting article. What consumers often forget is that you get exactly what you pay for. As an example, I e-Mailed a suggestion to Facebook early on to suggest they offer an option to subscribe to their service for a fee so you don't have to see the ads. I like their service so I am willing to pay a small price to use it because I understand server maintenance isn't free and I would prefer not to have to deal with the ads.

With more and more "free" services that rely on advertising the Internet is quickly becoming saturated with ads. In a world where every producer wants our attention (and ultimately, our dollar) we are quickly approaching a point where consumers will be overwhelmed by advertising. If consumers get tired of being bombarded with ads the "supported by advertising" model could easily back-fire. And who will pay for those "free" services when consumers refuse to pay attention to the ads? Or worse, they stop buying the advertised products and services.

We're human, we have a limit.

thats why i have programs like AD-Muncher (not free) & AdBlock Plus (free extention for Firefox) installed to get rid of pretty much all (well vast vast majority of em) ads online and popups as there just flat out annoying and it's quite rare if a add is any use to me as i think most advertisements are pointless anyways... since like i said before i pretty much know what i want and what i like etc.

since most of what i do usually revolves around Video Games + Movies + Computer Related stuff and just general Electronic stuff... which i usually know exactly what i want in these areas.... so advertisements you see on TV about IPOD's etc etc etc to me are useless as IPOD's are basically overpriced MP3 players which you can find other brands for cheaper price that are just as good etc... i think you get the point..... but obviously advertisements must be working more on a positive side as far as the majority of people otherwise the companys would not spend craploads of money on every year.

this article is pointless. TV has been the same way for decades. you get the signal for free and you get advertised to. the only people who care are the nuts who think ads mind-control you into buying things.

Miles Acton said,
the only people who care are the nuts who think ads mind-control you into buying things.

Who are these "nuts"? Suspicious people in general? Or the corporations who have spent hundreds of billions of dollars on television advertising in the last 50 years?

You might be interested in knowing that the Chinese ideogram for "advertising" literally translates as "wash brain"?

Octol said,

Who are these "nuts"? Suspicious people in general? Or the corporations who have spent hundreds of billions of dollars on television advertising in the last 50 years?

You might be interested in knowing that the Chinese ideogram for "advertising" literally translates as "wash brain"?

you might have a point. but im one of the people who thinks advertising (as far as "buying" stuff) dont effect me that much personally... cause if i want something ill get it .. if i dont, then i wont get it.... no amount of advertisement will change my mind as far as wanting to "buy" something (for the most part) ... although i would think the brain washing is somewhat true as far as some things as it can sway the public opinion of certain stuff.... but as far as "buying" stuff (at least for me personally) i think it's minimal at best in general.... cause some commercials i think think are funny at times but i still dont buy there product cause of it being funny.... as far as say movies, sure some movie trailers can make a movie look cool but generally speaking the majority of movies released are horror type movies which generally is one of my least favorite movie genre's in general.... but overall as far as movie advertising (for certain genre's) it can sway my opinion of "wanting to see" a movie some but i rarely goto theaters anyways as i tend to watch my movies on DVD ( well XviD format mainly ) ... but i will never buy a DVD movie unless im sure i like it (like have seen it and KNOW i like it) so in some areas im more influenced than others..... but generally speaking vast majority of advertising on TV have little to no influence on me overall.... but i do think alot of whats in movies and whats considered funny in movies (most (as in majority) comedy's nowadays i generally dont like overall personally etc etc) DOES change the general way the younger crowd (basically teenagers) acts.... and stuff like MTV/VH1 the way people dress etc influences the younger crowd to quite a bit overall.

so i do think genetics and society in general does shape what sorta person people are etc etc .. but thats sorta another subject.

i think i said enough now as we sorta getting off topic lol

ThaCrip said,
you might have a point. but im one of the people who thinks advertising (as far as "buying" stuff) no amount of advertisement will change my mind as far as wanting to "buy" something (for the most part)

People need to understand that advertising isn't about making people want to go right out and buy something. It's about making you comfortable with a company or a brand, so that when you do go out to buy a product, you'll choose the company or brand that's the most familiar to you.

For example, when it's time to pick up a box of tissues at the grocery store, you're more likely to choose Kleenex over Happy Blow Fun Nose Wipe Towels because the name Kleenex has become totally familiar through a lifetime of advertising.

The fact is that people will always choose the familiar over the unknown - and it works whether the products you're selling are a fast food restaurants, insurance companies, prescription drugs, or politicians. It's called name recognition, and the sorry fact of the matter is that it works - even if you're fully aware of what's happening!

So because I know it will work - even on me - I do everything in my power to avoid all advertising. Especially television advertising. When I watch TV I keep the remote close at hand so I can at least mute any commercials I can't totally avoid. But my primary weapon against TV advertising is my DVR. I record almost everything I plan to watch in advance and then speed through the commercials without watching a single one of them.

And for those who would disparage me for avoiding the advertising that is paying for my programming, let me assure them that I would be more than happy to directly pay for any and every program that I watch if the powers-that-be would allow it. Unfortunately they won't.

At least in the west, corporations have a death grip on the brains of the majority, and they are bound and determined to keep it that way.

There is nothing free, that article is bull****. Everything costs money, the only thing that matters is who pays for that thing, and on customer POV as long as he is not, he doesn't care.

And that model will work as long as there is someone else who pays for the things.

It just looks like the article writer envies google for their success?

What a joke.

Mike Frett said,
Sure it's healthy, it teaches people to do things for others instead of money. Greed is what's unhealthy.

I'm assuming that you are responding to the following statement:

Quote - The story says:
A culture where consumers think that increasingly more and more services should be free is not healthy.

About which your response makes no sense whatsoever.

Doing things for others, free, is healthy; expecting to get everything free is itself a type of greed and definitely is not. For example, theft is a result of people believing that they are entitled to someone else's property without paying for it. Do you think that's healthy?

"Greed is what's unhealthy."

Absolutely. And wanting more and more and more without paying for anything is very greedy and unhealthy, especially to the economy.