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Why FreeConomics Doesn’t Work*

One presentation I was genuinely sorry to miss today (along with Lee Bryant‘s Niche Social Networks FTW) was Alan Patrick’s presentation on the Limits of Freeconomics. Luckily, he’s already posted the slides from his presentation:

The key message here is subtly different from the one that seems to permeate much of the conference. There’s an implication that Web 2. startups should be shifting away from ad supported models, because of the economic downturn and the steady drying up of ad budgets. But Alan’s point is deeper than that. What he’s illustrating in these slides is that the “Free” model was never, ever going to work for anything other than a tiny handful of companies. Simply put: there was never enough ad spend out there o support the number of companies who were relying on it.

And that brings us into a whole different ball game. What the credit crunch has done is expose the reality of a situation that was already there, rather than creating a new one. And that has profound implications for the sort of Web 2.0 tools we’ll see emerging over the next 18 months.

*For Everyone