Freebie Madness: I just published

Thursday, August 29, 2002
Posted in category Uncategorized

Freebie Madness: I just published a very short article – about internet Freebie-ism – on, and received a tremendous amount of letters on the topic. In addition, I was made aware that LRC’s Jeff Tucker also wrote something voicing a similar opinion last year. Interesting. I received a tremendous amount of nasty mail demanding to know how I can dare question the free services of Yahoo! and Hotmail. The bulk of that mail came from free Yahoo! and Hotmail email accounts. Hmmm. Due to the amount of responses and inquiries, I am going to address some of my mail responses.

It appears, by the comments made, that the writers of the nasty letters did not read what I said at all. First, all of the free riders out there came down on me for “calling for government action”! to interfere with the use of free services. And of course, nowhere was this ever said. They, of course, did not note that I indeed commented that internet services – such as Yahoo! – could possibly progress toward a structured pricing system that would demand an explicit economic price for each level of service. Then, and most amazingly, I was told – by many – to go elsewhere for services (I’m in Yahoo!’s pay service, by the way) if I don’t like spam. That’s pure “blame the victim” stuff; and it’s disappointing to see that so many people approve of the private property trespassing of spamming, and actually blame the victim for being spammed. Folks seem to have no problem inconveniencing victims of trespass so as to pander to the free riders/private property abusers that trespass upon me or others.

It’s funny how certain conservatives and libertarians can trumpet spamming as “the free market at work”, without looking at the issue of private property. As a private property anarchist, I think it is entirely anti-private property to be pro-spam. However, property rights are typically always overlooked in order maintain a status quo of collective ideals. This flies in the face of libertarianism, as well as basic rights. After all, the basic libertarian axiom is that one shall not freely agress against the property of another when one is not invited onto that property. However, since the spamming/private property issue was not my thesis, but only a sideline to the discussion of free services, I shall come back to this at another time in greater detail.

When talking about freebie internet services, I merely bring up the notion of the economic conundrum posed by not using an explicit economic price for goods or services. And, looking at all of the rampant dotcom failures, especially the failures of free service providers (with Excite-@Home being the most visible), it clearly doesn’t always make good business sense, and it should be analyzed and questioned by anyone interested in market or financial issues. After all, Yahoo! is another company whose financial statements make market analysts shudder. And non-financial people clearly don’t want to understand that. They think that since a company is presently in business, and offering free services, all must be well and good.

The free-riding issue involved with these free services is/was not a complaint!, but rather, a point of interesting discussion. But of course, dare mention that free services might be better as paid services, and the hordes of parasites revolt and spew forth venom.

When the explicit price is not apparent in a free market, “stuff” will happen. Non-paying customers (free riders) will look to take all they can get from the service, as quickly as they can. Excite-@Home had free services, too….they went bankrupt. And their paid services (I was a customer) were excellent. But when it’s free, the free riders will tend to overrun the system and wreak havoc upon the service’s paid customers. So whether or not you approve of Yahoo! or MSN’s business practices, this is a given and can not be disputed.

And before more people claim that these freebie businesses are well-oiled, profit-making machines that are doing that which they deem most profitable, they should read and understand the financial statements of many of these companies, including the horrid cash flows. The dotcom business mentality, methods of financing growth, capital structure, etc., is not successful in the main. It’s all been about “growth”, not profits or wise capitalization. That’s a fact that nearly all financial analysts clearly agree on. But that’s another whole issue.

All said, it’s interesting to note where this will take us in the future. As many readers noted, there are many internet email services out there that offer service for small annual fees, typically $30/year or so. It’s a great start and a good idea for individuals needing a different level of service. But with all of MSN’s and Yahoo!’s other services (communities, photo albums, greeting cards, custom homepages, financial news, stock prices, weather, flight tracking, etc.), it makes it tough to peel away from having everything convenient in one spot.

But hopefully, internet companies offering free services will start charging everyone, and weed out those who don’t deem it a necessary service! It’s something to think about. Or is it just that people don’t want to be made to think?

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