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Monday, 18 March 2013

Would you pay for Facebook, Twitter or Google to cover the cost of free?

Many people were up in arms last week when Google decided to pull the plug on its free RSS reader after writing on Google Blog saying: "While the product has a loyal following, over the years usage has declined. So, on July 1, 2013, we will retire Google Reader."

No free lunch on the web
Many internet users do not realize the costs associated with running such a service and seem to expect to receive services for free. Like, Facebook and Twitter, most of Googles services are free for the most part. Out of the three of them,they have done quite well selling advertising space to cover their costs, which is the main source of revenue for Google and the only answer to monetize and support such services. This is easy enough for Google to do as they are providing search results, where as Facebook users learn to ignore the ads. Twitter still does not really do much at all to sell ads space but they are starting to now.

The end of free on Internet?

The fact is that Google seems to take the lead when it comes to selling ad space, however they have still managed to axe 70+ Google services in the last year alone. A few months ago Google recommended that Gmail users switch to a service like Outlook or Thexyz to continue using Mobile Sync (Microsoft ActiveSync), as it will be discontinued (source: CNET). Google announced in late 2012 that their email services when used by business will be charged at a monthly cost.

Mark Zuckerberg has always said Facebook, "is free and always will be,"however the service it being supported by optimistic shareholders that Facebook will one day turn a healthy profit. With over 900 million users actively logging in to upload photos, statuses and videos, Facebook runs a hefty hosting bill. It currently costs $83 million a month in hosting costs (source: Facebook) and last year Facebook made a mere $4.84 in revenue per user per year (source: TechCrunch).

Social networks are failing left right and center, through my work at phpFox I see this happen right before my eyes. Running a large social network can be even more difficult, especially if it is a free service. Here is an info graphic of some failing social networks.

1 comment:

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