I recently had the chance to talk with Dalton Caldwell, founder of App.Net. He was in New York, and came to join a few App.Net users for a brunch meet-up at Pershing Square CafÃ©.  While meeting him was great on its own, talking up the future of his service made my all the happier that I took the plunge and joined up. It’s clear that App.Net is trying to be a service that exists for the benefit of its users. This is why they’re charging people to join the service  Having a stream of income from the people who use the service allows them to not be beholden to outside forces, be they venture capital firms who want to run up the value for an IPO, or advertisers who want to exploit the audience for their own gain.
There’s two types of businesses on the Internet: those who put users first, and those who put advertisers first. There’s no mutual exclusivity between free services and services that put users first, but one should be suspicious of any free service unless they have a clear way to keep the service running that won’t require them to capitulate to the demands of people who offer large sums to money for access to its users. To put it another way, you’re either the customer or you’re the product.
Freemium services survive because enough people are paying for the product that the free users get subsidized. Dropbox is the canonical example of this: as a free user you get 2GB of space, while the smallest paid tier gives you 100GB. Dropbox is, hopefully, making enough from paying customers to provide their service with enough overhead to pay for the free users, cover their rent, the cost of the Internet connection, salaries, power, cooling for the servers, and have enough left over for growth.  App.Net is hopefully making enough money on the early adopters, paid-tier members, and developers who bought early API access that they can provide 10GB of storage, allow and encourage third-party apps, and build up the technology behind their service. Both of these companies are putting the users first.
Compare this to Twitter, Facebook, Google, or any of a huge number of companies that make the bulk of their profits from collecting and selling a user’s personal information to the highest bidder. Not all of them make it public, but it’s important to ask yourself that, if a company is giving something away, what will allow them to keep it going for the long haul. Mailbox for the iPhone was created, from the start, to be sold.. If not, they would have, or at least should have charged to use it. Thankfully, they sold to a company that puts users first. Meanwhile, Vine sells itself to Twitter, a company that knows it can take what people are doing on this new service and make money from it in a far less ethical way.
Few people put this amount of thought into the services they use, free or otherwise. The power of “free” is enough to short-circuit more rational parts of our brain that recognize that there is a cost to something. We just might not be paying it in cash, or a recurring charge on our credit card. More importantly, fewer people ever will put this amount of thought into the services they use, until something happens to one of them that will knock them out of the complacent malaise dominant, free services engender. Discussions like this have happened on the web with each free service that gets bought out or shut down, be it Instagram or Google Reader, but they’re becoming more frequent now. I feel the tipping point will be reached soon, and when it does, the way we, as a society, look at the Internet will change, dramatically.
Though they have an invite-only free tier. ↩
They certainly had enough to buy [Mailbox], which made me comfortable enough to start using the app. If I can trust Dropbox with the files that make up my digital life, I feel I can trust them with my e-mail as well. ↩