Friday, December 12, 2008

Free Business Models Are Dead

Do you know about Marc Simoncini, CEO of Meetic? He is one of the main person in the European web. He is the owner of Meetic, French leader of the dating websites market. He was one of the speaker of LeWeb 08, the famous Web conference in Paris that happened on December 9th and 10th. One of his main bullat was about business models based on "free".

Free As The Only Business Model Of The Web
This is actually the perfect timing to think about this issue. Indeed, the web 2.0 is starting to be affected by the crisis, and as it is still unfolding, start ups are experiencing much trouble in their expansion. As it is more and more difficult to get financing, VCs are seeking for financial stability and paying close attention to the ability of the new company to generate benefits as fast as possible.

For the longest time, the main examples of the Internet were companies developping an active community, where users could log in and use the service for free, and then set up an advertising platform for companies willing to sell products to this community. Thus, most of the companies weren't much interested in their business plan, and the way to monetize their idea first, as the concept was "if your service gets great exposure and a large audience, you'll find out anyways some way to benefit".

Meetic: a fee based business model
Meetic is probably one of the best success story of the European web. Meetic is the leader of its market, which it locked so well that world leader has never been able to compete with this service. Whereas most of other websties are free, you need to pay a fee in order to use the service.

Now, CEO Simoncini, is pretty happy of its choice, as it is experiencing great success. He also believes that for this troubled days, business models based on fees and subscriptions are more likely to be developped and to get profitable in the end than others.

I also believe that having a service you could make your users pay for is a more secure way to develop your business. If users are valuing the service, they'll accept to pay to get it. What do you think about it? Here is a video in French of Marc Simoncini.