In a blog post today, legendary Internet Billionaire, Mark Cuban says businesses that are “free” are doomed to failure.
“Lets look at the rule that eventually KILLS all freemium based content plays:
There will always be a company that replaces you. At some point your BlackSwan competitor will appear and they will kick your ass. Their product will be better or more interesting or just better marketed than yours, and it also will be free. They will be Facebook to your Myspace, or Myspace to your Friendster or Google to your Yahoo. “”
Cuban’s blog post then goes on to say Google is doomed as well.
“””Google is not unique. The same happens to all companies based on free.””
“”The same will happen to Facebook, Twitter, pick any company who lives off of free.”””
“”When you succeed with Free, you are going to die by Free. Your best bet is to recognize where you are in your company’s lifecycle and maximize your profits rather than try to extend your stay at the top.””
All and all an interest post with plenty of comments already posted.
My personal take is Mr. Cuban is wrong.
You can have a very successful business built around “Free”.
FreeCreditReport.com has done just fine over the years, and by the time Google is replaced by some new search company, plenty of millionaires will have been made by founders, workers and shareholders.
Moreover, the flip side is that just because you charge for your product you can go out of business just as easy.
Bear Sterns, Lehman Brothers and GM, just to made a few companies, did nothing for free. How did it work out for them?
Making blanket statements usually gets you in trouble.
Google makes a Ton of money not charging users.
Yes the bottom line is making money and sometimes “Free” can make you a lot of money.
Check out the full post by clicking here.