Money Puzzle

Yesterday I talked about the closing of Audioblogger (http://www.audioblogger.com/). It really shouldn't come as a surprise to us that a company offering a popular, valuable, program-intensive and storage-intensive service for free is no longer going to do it. (The company itself, Odeo, is not going out of business, just focusing on other things).

I'm surprised that we haven't heard more about these free services shutting down. I think we will see more by 2008. Companies use the free services sometimes as a loss leader or sometimes as a way to generate a lot of users quickly so they can resell the company to a new owner. Those ideas make sense but if the loss leader is more popular than the purchasable product or if no new owner comes along, then there could be financial trouble. That's not to say that's what happened at Odeo, but rather just an observation about many of the free services available online. (If you want some examples, just scroll though back issues of this blog because I try to report some of them to you from time to time).

I think we'll see this happening in waves in the future: free services for some time that build on the latest trends (blogging, email, and other collaborative or communication-centered programs, for example)… then those free services moving toward paid models… then new trends creating free program opportunities.