[nilobject]

I don't know if it's true that free is killing us. I can point to several counterexamples, such as 37Signals and FogBugz that charge for their applications, and are apparently healthy. I think that no matter what, there will be people who want quality service without the advertisements.

The author compares launching big and launching small, but really they're apples and oranges. Yes, to launch big, you need to make a big splash and either be free or very low priced. But the alternative is still there: get the niche market, and launch slowly and by word of mouth of your users.

I don't think we're in a situation where you can't launch small and make a living.

[lux]

Those are good examples. I think there must be a difference in market for them than for what the author seems to want to sell. Basecamp, FogBugz and the like are business-oriented tools and businesses don't mind paying for something of value. They show that their audience is up for exactly what he wants.

Plus, with the cost of hosting a small service being so low, a service of this sort ought to be making a little money fairly quickly (maybe not to where you're making a decent living yet, but enough to work at it and get it there if it's something people want and will recommend).

Being a small software biz owner (and so someone who pays for software), I find the mindset of my friends, who can't fathom paying for anything, kind of strange.

Not that I pay for everything, but I would rather use a better tool for a fee than an inferior one that costs me time. And judging by the Basecamp numbers, I'm definitely not alone in that one.

[nostrademons]

More counterexamples: LiveJournal, Flickr, HotOrNot.

[nilobject]

I forgot an obvious one that I pay for: SmugMug.

[wallflower]

From a talk by Jeff Barr, Amazon's Web Services Evangelist:

Smugmug is one of the biggest customers for Amazon.com web services (meaning they could be invoiced if they wanted to be). However, they are billing everything on a American Express Platinum corporate credit card with the highest credit limit ($100K). Jeff says every month they probably earn three or four first-class tickets based on bonus points.

According to Jeff, their rate of growth is astonishing (Jeff said that they are storing about 15TB (yes, Terabytes) a month in S3). What happens to images in Smugmug ceases operations? Well, apparently the family has committed to a multi-generational commitment.

[hollerith]

Another example is the blogspot competitor typepad.com: it does not offer free blog accounts: accounts start at $4.95 a month, and go up from there.