Will Everything That Is Free Eventually Fail?

I just happened to stumble onto an article by Mark Cuban and his take why everything that is free will eventually fail. He makes mention of some of the web’s favorite freebies such as Twitter, Facebook, and also Google. His theory is that there is what are called “Black Swans” who will have a better idea and end up kicking the other companies’ asses. Of course the “Black Swan” offerings will also be free. Interesting.

Mark Cuban also states:

For Google, who lives and dies by free, we don’t know who their BlackSwan company will be. But we all know it will happen don’t we? The only question is when. Of course Google knows it as well. Which is exactly why they invest in everything and anything they possibly can that they believe can create another business they can depend on in the future.  They are spending incredible amounts of money in search of the “next big Google thing.”  When their BlackSwan competitor appears, they won’t be in a position to compete with the newly presented model, particularly if it’s free based because their ecosystem has bloated to the point where they can no longer create anything for free.

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.

It’s not that they can’t make money offering free. They can, have, and will. The problem is that they know that it’s literally impossible to be the king of the mountain forever. But that won’t stop them from trying. And that is exactly what will kill them.

I must admit that this is a powerful argument. But then one could also argue that this happens to powerful companies as well that made a ton of cash over the years. Yes, I am thinking of GM. But there are other companies, free and well paid, that have failed and gone out of business. Think dotcom bust and Circuit City

What do you think? Will free companies all fail?

Comments welcome.

Source.

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I have been writing for LockerGnome since relocating to Missouri seven years ago, where I continue to be a technology enthusiast who enjoys playing with the newest and latest gadgets.

  • http://www.gilsmethod.com gjperera

    I’d say I have to disagree with those statements. Google is not free. It gives you the impression that it is free, but like any billboard that sits next to a major interstate it charges for that precious real estate. If Google were free it would not make money, plain and simple…remember there is no such thing as a free lunch.

    The question ought to be, “When Google starts charging for Gmail/Picasa/etc, like they do Apps, will people continue to use it and pay a fee or flock to the next competitor?”

    Remember Gmail technically isn’t free. They indirectly charge you by placing conspicuous ads throughout the window that slow down your access (not noticeably) and take up precious real estate. Although they are not charging you per se…they are indirectly charging you for a service…does that make sense?

  • mhz

    Ok, here goes …

    Salvation by faith in Christ is free (to us)… and it will never fail.

    “Therefore, as through one man’s offense judgment came to all men, resulting in condemnation, even so through one Man’s righteous act the FREE GIFT came to all men, resulting in justification of life.” (Romans 5:18)

    “For He made Him who knew no sin to be sin for us, that we might become the righteousness of God in Him.” (2 Corinthians 5:21)

    Sorry Ron! The headline just begs for that to be said. Of course I know this is not where you were headed with this… but I had to do it.

    I’m not trying to start a theological discussion or anything. Just had to say it. ITS JUST THE PHRASING OF YOUR HEADLINE! It had to be said. ;)

    Sometimes the truth just screams for an audience!

  • http://wp3.lockergnome.com/nexus/blade/ Ron Schenone

    Hi mhz,
    Excellent point my friend. God bless.

  • Ryan Farmer

    http://en.wikiquote.org/wiki/Stargate_SG-1/Ori

    “Glorious are the Ori, who lead us to salvation, who did fight the evil that would doom us all to mortal sin. Did they defeat the old spirits and cast them out? And now, with the strength of our will, they do call upon us to prevail against the corruption of all unbelievers.”

    “Ours is not to question, but to rejoice in their service, for they are perfection.”

    “Hallowed are the Ori.”

    And who could forget the Parable of Markon?

  • http://ictheworld.wordpress.com Hotrao

    I think that free doesn’t equal failure at all cost, but for a reason: the question is if everything that seems free is really free of charge.

    Let me clarify: Internet is free by default, but has obvious costs paid by companies, that have reflections on economy and, at the end on final users, paying their indirect cost to reapy what seems to be free.

    Of course is simplified, but, at the end, I think that free things don’t exist and at the end fail because the business case doesn’t stand.

  • Pingback: Free = Failure « How I see the world

  • Zack P

    (almost) Every thing will eventualy fail. The simple fact is that everything will eventualy be stoped by the next big thing and at that point the company will either disapear or change to something that does not resemble its start. Just remeber time changes all things

  • Janel

    Consider this for a few minutes… Classmates.com requires that you pay them $30 a year (or so) to have access to your profile and figure out who your stalkers are. Facebook and MySpace, I think have opened up the internet world, they are services you don’t need to pay to be on, and have connected people all over the world, because maybe more people have heard of them (unlikely), but actually because they are “free” to use. Sure you have your adds, and your “popularity” Next big Thing fad, so those sites as free may be left behind, but I’m sure sites like classmates.com are fizzling even harder.