The downside of working on free products

Fred Wilson has a post up today defending companies that have advertising-supported business models. I’m not opposed to free services, I use and enjoy a large number of them. Unlike the majority of users, though, I usually pay when I use a service that offers a paid tier. I pay for Rdio, a Flickr Pro account, a Mlkshk account, and probably others as well.

As a developer (or designer) who’s looking for a job, though, I think that working on advertising-supported products has some real downsides, because doing the right thing for your users and doing the right thing for your advertisers is often in conflict.

Trying to gather more data to offer more value to advertisers rather than customers is not appealing. Figuring out how to design your site so that users see more ads doesn’t sound like fun, either. There are compromises to be made in every business, but to me the compromises involved with balancing the needs of advertisers and end users seem really painful.

The further problem is that nearly all advertising-supported companies start out without a fleshed out revenue model, burning cash and trying to rapidly grow the user base. Then at some point they have to implement a business model, and the changes that necessitates often lead to massive user unhappiness. That’s not a pleasant proposition, either.

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