Free is the future

Oh my gosh, MORE signs of incipient meltdown.

I SO remember all those great books that came out just before the Dotcom bubble burst about how the US economy had radically changed and could grow forever at these unsustainably fast rates. Because obviously everyone knew that periods of much faster growth were completely unsustainabable. But everyone wanted to believe that the party was going to go on and on. Now meet Malcolm Gladwell's incisive analysis of why free is the future. That we should expect completely free cloud-computing in a whole range of new spaces provided by Google, LinkedIn, Facebook etc FOREVER.

In the short-term it sort of makes sense, provided you have quite flaccid government regulation which says "what the heck, let them compete unfairly by cross-subsidizing services in some markets with profits in others". Microsoft, bless them, got away with that for years and years until the regulators caught up with them. They too had their hired academics to prove that there was some natural law that said one commercial enterprise should tax everyone in the world to produce an integrated platform (see Cusumano, Selby (1998) "Microsoft secrets" Simon & Schuster, ISBN 0684855313). Hubris (remember Bill's famous comments about the US government) and their blatant cross-subsidies in the internet browser wars finished that play.

Our modern equivalent is "citizen journalism". The widespread availability of digital cameras, the disinhibition and consequent willingness to upload revealing material, and broadband access to that material to a voyeuristic consumer population has driven rapid take up of free media sources: Google, YouTube, Facebook among the stronger, MySpace and others now weakening. Unlike the sale of Hotmail to Microsoft for ~$10/user which launched a thousand free e-mail sites in the Web 1.0 era based on a "spin up, sell out, be a happy founder", this time around everyone is claiming that they can do this FOREVER. Google secrets (http://books.google.co.uk/books?id=pGjYwwdoD2EC&pg=PA177&dq=google+secre...) tells us in breathy tones about the resilience and scaleability of their hardware distribution of data searching. As usual, there is claimed to be some industry "convergence" which just radically changes everything. But the radical cuts happening in MySpace and the fall in the valuation of Facebook tell a different story.

There is NO FREE LUNCH. I am writing about this because it is my JOB to run a paying member community, and I have to figure out what platforms are going to be there in a few years time. You are reading it because it is your JOB to make money by getting people to interact online and monetize their interactions. We are PAID to do this stuff. Just like Mr Gladwell was paid to write his book about content being free, and made sure to not just upload the text to Google Books for everyone to read.

Try this mental exercise. Project out into the future a bit. All the exciting sexy growth and addition of new members to LinkedIn, Facebook etc has finished. We still aren't changing our purchasing behaviour in any significant way (remember those amazing valuations of Amazon which meant you had to be buying white goods and cars thru the site for it to make sense?). The VCs who backed the play want their return. Who is going to pay for all those lovely free services?

Cloud-computing is just SO going to crash.