moderated Re: Changes to new basic groups #update

Marv Waschke

From day one of my awareness of I have been troubled by sustainability of its business model. During my career in software development I saw good products fail when finance directors insisted on charging more than the traffic would bear and used support as a bludgeon to drive dependent customers into line. Eventually, competition offers a better deal and the customers walk. Business models work in the long term when pricing aligns with value-- when the value of what the customer gets from a service aligns with the price they pay. Pay too little and the business goes bankrupt. Charge too much and the customers leave.

The public has gotten used to digital network services, like Google and Facebook, that are ostensibly free to consumers and are sustained by profits generated from the consumer's use of the service, a model that is okay, I guess, but invites exploitation and abuse.

The ostensibly free model has been aided by the dramatic decrease in cost of storage, network bandwidth, and compute cycles from large data centers. The cost decrease has made services like, which does not generate revenue from their consumers' use of the service, able to offer some free services, but without generating revenue from usage, the free services have to be paid for somehow. Most often, this is done by charging for "premium" services. The revenues from premium services pay for the free services and the free services are an advertisement for premium services.

From a business management standpoint, the challenge in the type model is to balance the cost of supplying the free service against the value of the advertising in promoting the premium service and the revenues generated by the premium service. This is complicated by the step-wise nature of digital costs. (Supplying a 1000 customers with a digital service often costs the supplier little more than the cost of supplying the first customer.) These factors are not easy to balance. I sympathize with Mark wrestling with this hard problem.

I have one observation: free services have tremendous value to society in general. As several people have pointed out, free plan helps many worthwhile causes that could not pay for premium services. As an independent businessperson, Mark is free to charge what he wants to whom he wants. He is not a government agency, a regulated public utility, and he holds no monopoly on email groups. He has no special tax status, he is not even a publicly held corporation. He can, if he wants, within the limits of civil and criminal laws, determine who gets free services based on any criteria he cares to use. I hope he keeps the interests of society at large in mind as he tunes his business model, but that's his business, not mine.
Best, Marv

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