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4/3/2013
01:51 PM
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Google Reader Flap Shows 5 Problems With Free

Google Reader's shutdown reminds us that free technology tools can come with high costs.

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Everyone loves free stuff. Whether your budget is large or small, it's tough to argue with a price tag that reads "$0.00."

Yet "free" sometimes costs more than we think. The pending shutdown of Google Reader serves as a reminder of the downsides of free or "freemium" technologies. Chief among them: Someone has to pay the bills; otherwise, the lights eventually get turned off. As InformationWeek's Thomas Claburn noted: "Online services cost money to operate and those using Reader weren't paying to keep the service running."

That straightforward fact extends well beyond the Google Reader case. It also underpins many of the problems free technologies cause for business users in terms of reliability, availability, security and other areas, according to Techaisle analyst Anurag Agrawal.

"It is better to use tools that require at least some payment for the services rendered," Agrawal said in an email interview. Agrawal believes free technology tools are better-suited for short-term projects and tasks: "For example, Google Docs to share a spreadsheet among school students signing up for a field trip, or Hitman Pro to remove malware from PCs or [a free trial of] Basecamp to manage a small project with 1-2 weeks duration," he said. Among other reasons for that mindset: It involves less exposure to long-term risk if that service disappears or is otherwise disrupted.

[ Free is risky, but so is choosing paid software. See Office 365: Why A Law Firm Switched. ]

But we like free. Why should we pay up? To be sure, there are plenty of reasonable use cases for free technologies. But business users that don't at least ask the question "why is this free?" might be ignoring potential problems down the road. Let's look at five hidden costs of "free."

1. Free Isn't Often Viable

No one, Google included, shuts down services because they're profitable. "Companies go out of business without revenue and profits," Agrawal said. When they do, users are often left in the lurch: "Users may lose their data and also have to find and train on a new solution."

So while free tools can solve a "now" problem without busting the budget, there's little promise that they'll continue to do so in the future. "Freemium models are still in vogue," Agrawal said. "However, not all companies succeed in converting free users to a sufficient number of paid users." When that happens, services -- or entire companies -- can disappear almost overnight. Take Loosecubes: The website offered freelancers and other professionals free short-term office space by matching them with area businesses that had desks to spare. It was a nice, community-minded idea -- but one with no apparent revenue streams. The company shut down on November 16; it sent an email to users announcing the closure on November 13.

Agrawal noted that products and services get mothballed regularly even when the companies behind them continue to operate: " "Companies may stop releasing updates or completely remove the product from the market," he said. "Again, users lose."

2. Free Is Not Always Forever

Just because Microsoft gives away 7 GB of free SkyDrive storage today doesn't mean they'll do so tomorrow. "Companies may change their product strategy and start charging for services that were free," Agrawal noted.

Google offers another example here: It recently discontinued the free version of Google Apps, which had been available since the suite launched in 2006. While apps like Docs and Drive are still available free to individuals, companies must now pony up for a Google Apps For Business account. Tough to fault Google for that choice, but if you picked Google Apps because "free" was cheaper than Microsoft Office, it's no throwaway concern.

3. You Get What You Pay For

The adage does come true, particularly in the freemium model, where Agrawal noted the goal is ultimately to turn users into "tool addicts" so that they can generate revenue from them later. Many free services are in fact stripped-down versions of the real deal. Security software is a good example: You can get dozens of desktop or mobile antimalware apps for free, but you'll get only the basic level of protection.

4. No Neck To Wring

"Free service" usually equates to "no customer service." You can't often give your product away and maintain a white-glove customer support organization, after all. "A free service has zero to limited support," Agrawal said, adding that when support does exist it's often in the form of canned emails that create frustration rather than alleviate it. That frustration spikes when problems occur and there's no neck to wring, so to speak -- it's tough to complain about "free," or rather it's tough to get someone to listen to that complaint. (This e-card perhaps puts it best: "I'm appalled that the free service that I am in no way obligated to use keeps making changes that mildly inconvenience me.")

The do-it-yourself set might be willing to make that cost-versus-support tradeoff; that's an appeal of open source platforms for some users, for example. Just be sure to realistically assess your support needs in advance -- not after things go wrong and there's no one to answer your call.

5. Privacy & Security Concerns

Writing about the Reader shutdown, InformationWeek's Claburn asserted: "Trusting any business to operate a service at no charge is trust misplaced." That misplaced trust includes matters of security, privacy and similar issues, too. One might argue the same is true of any online service, free or paid, but on the free side of the equation such concerns are -- or should be -- more of a given.

"Security of the data is always in doubt," Techaisle's Agrawal said.

The Internet erupts in a fury when Facebook tweaks its privacy policy and other settings, yet the uproar often fails to adequately recognize a simple fact: Facebook is a business. Its goal is profit, not privacy. Privacy is a worthwhile ideal but it's just that: an ideal. Folks that fret over how their information is used should be wondering why Facebook -- or any other free service -- doesn't send them a monthly bill for their usage.

Small and midsize businesses are falling prey to cyberattacks that cost them sensitive data, productivity and corporate accounts cleaned out by sophisticated banking Trojans. SMBs are typically on the hook for these losses and lack effective means to prevent them. In this Small Businesses, Big Losses report, we explain what makes these threats so menacing, and share best practices to defend against them. (Free registration required.)

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cashell
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cashell,
User Rank: Apprentice
4/9/2013 | 8:05:48 PM
re: Google Reader Flap Shows 5 Problems With Free
I agree with most of your points, at a high level. However, not only do I disagree with your conclusions, but I would argue strongly that most of your conclusions are not supported by any evidence you provide. Specifically, the pending shutdown of Google Reader is disappointing; I use it very heavily myself. However, the fact that it was a free offering doesn't relate in any way to it shutting down or the risk of using it.

The analyst you quote, Anurag Agrawal also provides meaningless statements that are unsupported by reality or his arguments. To start with, he uses Google Docs as an example, without commenting on or differentiating the free version from the paid version. Is the paid version less risky than the free version? If Google decides to someday kill Google Docs, does he really think they're going to kill only part of it? How exactly is there "less exposure to long term risk if that service siappears or is otherwise disrupted" if I've been paying for a service, as opposed to getting it free? If the vendor kills the product, I'm screwed, regardless of what I paid for it.

As to your "5 problems", let's take a quick look at each:

1. "Free isn't often viable" - First of all, that's a rather large bias you're showing through the wording in that statement. You seem to be suggesting that free *usually* isn't viable. Considering the volume of free offerings, many of which have been around for many years now, I'd be curious to see if you can provide any support for that. Perhaps you should have worded it, "Free often isn't viable"?

Then we're back with another quote from Agrawal that applies 100% equally to all companies, regardless of how they're pricing their services. This is simple economics 101, without revenue and profits, a company goes out of business. It's up to the company to figure out how to make that profit, and there are many models available; yes, some of them even involve free products or services.

2. "Free is not always forever" - Of course not. Neither is paid. That's life. Nothing is forever. I've used 3 paid music services over the years. All of them have since closed up shop, and I lost anything I had invested in them.

Regarding your example of Google Apps, please note that they discontinued new sign-ups for it. They did *not* discontinue it's use by existing users. As someone who's using their free Google Apps service, they didn't take anything away from me. Maybe in this case, free is forever?

3. "You get what you pay for" - I'm not going to waste much time on this on, as it's just silly. I'll make sure to remind the next startup that builds a successful company on free and open source software, though.

4. "No neck to wring" - Most people are smart enough to know that free typically involves little customer support/service. If you want support, you pay for it. Offering a free tool/software/service, and charging for support is a very common business model, and many companies are doing quite well with it.

5. "Privacy & Security Concerns" - Here, the quote from InformationWeek has nothing to do with privacy or security, and seems strangely out of context. Moving on from that oddity, we get interesting comments about Facebook and their privacy policy. The comments seem to show a lack of understanding of Facebook's business, however, along with what people get upset with.

Facebook is a business, and their goal is profit, yes. However, Facebook's value is tied exactly to the number of users they have. In order to keep their users coming to the site, Facebook makes an agreement with their users regarding use of customer information. If they change or violate that, they risk losing their userbase. And, as their value is tied directly to their userbase, upsetting their customers with poor privacy policy changes will cause them to lose users, and will affect their bottom line.

Yes, technically Facebook is free for users (although, there are plenty of paid services being sold on top of Facebook by Facebook). That doesn't mean that Facebook isn't being paid.
GNAIR319
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GNAIR319,
User Rank: Apprentice
4/8/2013 | 1:48:55 PM
re: Google Reader Flap Shows 5 Problems With Free
Well, the free services offered for a beginning period gives the company an opportunity to see the customer experience and collect responses to optimize the service. In that case, is it a free service? Also many technologies have patent issues, similarity issues and these things can be dealt in a philanthropic clout by offering free service. There are situations and case studies floating where major companies introduced services much closely resembles patents and products & process from famous professors, innovators and SMEs like the "Informledge" ( type in Google itself, and see) issue, where the academic people neglected a patent. Hence a free service given for a period and later converted to paid service is a business process to derive customer experience estimation in an unpaid way.
SMB Kevin
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SMB Kevin,
User Rank: Apprentice
4/4/2013 | 5:54:15 PM
re: Google Reader Flap Shows 5 Problems With Free
It depends on who you ask... I use it, too, but I'm not exactly storing state secrets. The benefits (including the free 2 GB account) have outweighed the risks for me. It has had security hiccups in the past: http://www.informationweek.com...

-Kevin C.
Deirdre Blake
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Deirdre Blake,
User Rank: Apprentice
4/4/2013 | 3:14:49 PM
re: Google Reader Flap Shows 5 Problems With Free
hmmm, does this mean I have to reconsider the importance of all the files I store in DropBox?
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