Paid versus Free
Free World Dialup's journey from free to paid membership created a lot of criticism along with plenty of snarky comments about changing the name. Time will tell whether the move represents a stroke of genius or blunder. The fact few people see the stroke of genius part makes the experiment all the more interesting. All Internet startups need to navigate the paid versus free decision. The following lists a few of the categories where paid represents the right answer. In any case, the knee jerk assumption everything on the Internet needs to be free deserves some scrutiny.
1. Services that require reliability are usually paid: The issue here is enabling something more valuable than the price of the service. Lawyers do not jump on every cheap long distance offer. People continueto hold onto wireline phone service to preserve reliable access to E911.
2. Services that require accuracy are usually paid: LSSI sells 6mo old data at 10% of the cost of accurate up to date data.
3. Proprietary services are usually paid: The proprietary database services like Choicepoint charge on a per lookup basis to provide background on individuals. Choicepoint acquired 50 companies over five years to corner the market on these proprietary databases.
4. Customer acquisition costs are paid: The entire advertising industry exists as a mechanism for customer acquisition. ROI calculations make paying for customer acquisition an easy decision.
5. Monitoring services are usually paid: Nobody monitors home alarms for free. People can opt-out of monitoring, but peace of mind with cost.
6. Services requiring customer service are usually paid: Customer service is simply too expensive to provide for free.
7. Services requiring continuous improvement are usually paid: Free service offers tend to be relatively static given the lack of incentive/ability to invest.
8. Non-optional services are usually paid: Finding an ISP to connect your computer to the Internet is not optional. The free ISP's did not survive.
FWD paid membership makes sense in the context of just about all of these dimensions.
Infocom Ecosystem
FWD seeks to participate in a communication ecosystem entirely distinct from the one associated with traditional vertically integrated telecom. Infocom ecosystem companies specialize at a particular layer of the value chain (e.g. horizontal integration.) Communication solutions arise from a value chain that includes chip mfrs, device mfrs, software platform providers, application providers, and service providers. The chip and device mfrs determine the media types available for communication. Platform and application providers determine the particular form of communication. Service providers provide enabling services (things end users cannot do for themselves.) Service providers dominate the traditional telecom landscape, but service providers in infocom offer enabling services around the edges (e.g. SIP registration). End users contribute the content in both cases, but the options available to end users in infocom go well beyond those in telecom. The telecom ecosystem offers one pricing model, one level of reliability, one level of voice quality, etc etc. The offers of one telephone company are indistinguishable from the offers of others and do not change over time. The underlying elements associated with infocom communications improve in a manner analogous to Moore's Law in infotech. The net result should allow the infocom ecosystem to develop in an entirely different direction than telecom.
Dependence on telephone numbers killing growth
It does not seem a stretch to argue the world wide web would not have gained juggernaut status if navigation required "dialing" IP addresses. The inability of VoIP to move beyond telephone numbers represents a key a source of friction. There simply exist too many numbers to remember. Telephone numbers presume devices with keypads. They make it impossible to guess a number as can easily happen in the case of website URL's. The search process regarding telephone numbers is cumbersome relative to search services available for the web. No one carries around an address book of websites. People do carry around the cell phones to avoid the need of remembering telephone numbers, but these lists remain tied to the device (and disappear if the device fails.)
Audience size drives value, not control
The failure of IM platforms to find a solution to interoperability follows a decision to value control over audience size. The underwhelming end user adoption and ability to monetize these platforms follows directly. A few steps to interoperability exist, but progress leaves end users far short of being able to easily message anyone on any platform. Email remains vastly more popular the IM even though it may represent an inferior communication tool. The same dynamic plays out in the lack of interest connecting VoIP networks. There exist peering solutions, but the telephone network remains the interoperability mechanism of choice. This gets reflected in weak adoption of VoIP. A fully interconnected VoIP ecosystem would follow the example of the web where audience attracted content and content attracted audience in a virtuous cycle. The disconnected audience reality of the present destroys the virtuous cycle and everyone loses.
