ThinkFlood Blog

A lot of stuff today is free, and I love it. From open source to Google, from free Wi-Fi to various promotions and add-supported broadcasting and Internet content, we get a lot of great stuff for free. In fact, we’ve become accustomed to it.

I’m convinced that someone could write an interesting sociology PhD thesis by examining comments on the iTunes App Store. With something like 20,000 applications and counting, there are a lot of duplicate efforts, and it is not uncommon to see three, four, five, or more versions of similar applications. Invariably, some of these are available for free, and some cost money. Anecdotally, it seems that consumer preference is for the free applications — these have the most downloads, and they tend to get higher “star” ratings. In fact, I have seen cases in which commenters have disparaged paid applications which are functionally superior simply because they feel $4.99 is too much to pay for something they can get for free somewhere else.

To me, this is fascinating. It’s almost as if we have come to see free things as an entitlement. We want our music, our TV, our movies, our books, our software — everything we can get — free. Of course we do. Who wants to pay money if we don’t have to?

The thing is, free creates some problems. First, usually there is some sort of cost to produce these things. The Internet and the digital revolution have certainly reduced the cost of many things, but none of these is completely free to produce. That is particularly true if we consider the time spent in creating this content. Yes, it is possible that someone coding up an iPhone application during nights and weekends can offer that software for free (primarily because Apple subsidizes its distribution 100%). But I find that most things of value require more effort than this, and it is hard to make a living when you do not charge for your product somehow.

Of course creative people have come up with solutions to this problem. Some rely on advertisements to support their work. Others sell related services, or gather data from their users and sell that. However, generally speaking even these approaches cannot sufficiently subsidize physical products where the cost of materials and manufacturing is more than a few pennies per unit. For this reason, we don’t see successful free business models outside of software and media — they just are not viable.

But I think there is a more fundamental problem with free stuff, and that problem is the sense of entitlement we develop when we receive something through no effort on our part. When we receive things for free, we take them for granted. We tend to waste them. Our perception of the value of those products and services — and their paid competitors — actually decreases.

In my last post, I mentioned that we will be launching our product in April as a public beta. While many beta tests are free to participants, ours will not be. What we will do is offer a discount to our beta testers. They will be able to pick up our final, production hardware roughly at cost. This enables us to continue to function as a company — which is in the best interest of all of us, as it means we can keep our jobs and they can get product support and new software with new features. Since the hardware is not “beta hardware,” it seems reasonable to us that we offer a discount now, as they will end up with the full production version once we release our software updates.

But perhaps more important than recouping production and distribution costs on our hardware, it is critical that those who participate in the beta test actually care enough about the product to use it and to give us feedback. After all, the reasons we are bothering with the beta test are to ensure that the product works in a wide variety real world situations, and to understand what features and changes are most valuable to our customers. If those customers receive the product for free and then leave it to collect dust on the shelf, then we cannot accomplish those goals.

So, dear beta testers: we love you. But even if we could afford to give you the hardware for free, we wouldn’t.

Daniel-san, must talk. Walk on road, hmm? Walk left side — safe. Walk right side — safe. Walk middle — sooner or later, get squish just like grape.

©John G. Avildsen, Columbia Pictures Corporation

Ah, the immortal words of Mr Miyagi (Pat Morita) from The Karate Kid, cherished movie of my youth. My ears ring as I say this, but…

…sometimes it’s okay to go halfway. In my post from yesterday I consider how to answer the question, “When Are We Ready?” Well, we have done this with regard to the launch of our first product, and the answer is: we are ready now. But the answer is also, “We will launch first as a public beta.”

Yup. We’re going to launch next month, but we’re also going to call this version a “test” — i.e., not the final product.

So, what could possibly possess us to make like grapes and walk down the middle of the Interstate? The answer came as we considered those two questions: 1) is it valuable enough? and 2) can we afford to fix it?

The answer to the first question is yes. We think we have a really fun product that will be valuable to people every day. But the answer is also that we feel that a subset of the overall population will find its problems more tolerable than others early on. These are people who are willing to dive into a setup process that will be slightly more involved and tedious than what we have planned for the “final” product.

They are also people who are willing to deal with a few warts that will surface. This goes to the answer to the second question. This product is a new kind of accessory for the iPhone and iPod touch. At this point we are comfortable that the hardware design is solid. But the nature of this accessory is that it must interact with literally thousands of other kinds of devices, and there is no way that we could test all of the possible combinations beforehand. Therefore we anticipate that we will need to update the software to improve compatibility and squash a few bugs.

Actually, this last part is one of the most exciting things for us, because the ability to roll out software updates with new features and tweaks will be groundbreaking. We have many ideas of ways that we can make the product more fun and elegant. But what we want the most is to hear what other people think after using our product. We are launching in “beta mode” because we want the chance to hear our customers’ ideas about how the product can be better. We expect that they will have suggestions that we would not have considered otherwise.

And so that is the real value of going halfway — at least in this case. We can offer something useful as early as possible, and we can give our customers the chance to influence the design of the product so that it can be even more useful to them in the long run. I suppose some people might see that as a dangerous proposition. But for us, it’s mostly just exciting.