A grand don't come for free
The internet has changed the way people think about business. Not only has it blast the marketplace wide open – at the expense of companies like Zavvi – but it's also turned the notion of the business model on its head: companies are able to offer services online for free, and still generate revenues.
In the early stages, it looked like selling advertising was the answer. But the limitations of this approach soon became clear. Not only did they not generate very much cash, the system (where advertisers paid sites per click) was open to abuse. Furthermore, people soon became tired of irritating banners, pop-ups and splash pages... they used technology to block them, or voted with their feet and went elsewhere.
Webco's were forced to be as dynamic and innovative with their business planning as they were with their internet services. For small-time sites, the "T-shirt economy" now provides a steady, if somewhat meagre, income which at least covers costs.
Last.fm have an option to "subscribe" to their online music service. Even though the vast majority of the service provided is the same as that offered to people for nothing, a fair number of people chose to pay. I was one of them, because I enjoyed using the service and wanted to give a little back. I also thought they needed the money, which at the time they did. Since they were taken over by American media giant CBS, though, I haven't paid them a penny.
They say that money goes to money, but several examples from the internet show that sites that turn a small but loyal following into a significant revenue stream. Failing that, the open-source nature of many sites means they can tap in to a wealth of experience and get work done on their behalf for nothing. Wikipedia is the ultimate example of this: it's a tome of Hitchhiker's Guide To The Galaxy breadth, and yet none of its contributors have earned a cent for their efforts. Last year, Facebook came under fire for asking its users to translate the site into other languages, rather than using its own money and have professionals do the job.
And then there's Twitter. Originally, it planned to offer a service that would see everyone receive a text message every time someone they were following posted a message. As the popularity of Twitter grew (and then exploded), so too did their overheads. Remember, too, that they don't actually make any money for themselves; the biggest benefactors are the mobile phone companies.
Which is where the opportunity to make money arises. Twitter is now generating so much extra revenue for the mobile phone networks that they can afford to ask for commission. Based on the deal they've just inked with Canada's Bell Telecom, texts to Twitter will cost more, but this is because a percentage will be used to fund the service for the first time. If it means keeping Twitter "free", I think it's a small price to pay.
