Recently the founder of App.net, Dalton Caldwell, wrote a post criticizing bad faith negotiations between Facebook and his startup. Essentially during the negotiations, he posits that FB basically told him that what his team was working on was in competition with something that the social network giant was working on, but to be nice, they’d offer to buy their startup and build it into their structure.
To some of you out there, that might sound like a dream! Getting bought out by FB is ultimately not the worst way to go. But in reality, this is a business practice that deletes value. Why? When a startup is focused on being part of FB or Twitter as a platform, they build their product in assumptions that it will operate on top of the platform. When the platform changes the rules or basically tells you that your product can’t exist because it competes with something the platform is planning to add as a feature, it is no longer “open.” That means that independent developers no longer have incentive to build. If you build a platform that you invite others to build on and add value for users, it should be up to the users what’s valuable. As with all things, follow the money to understand the platform perspective.
Give Dalton some credit here, instead of folding up his tent and taking the pay day, he decided to go on his own and build a different model of social network, a paid service. He currently has a kickstarter page opened up with a goal of $500k, App.net is currently at $344k of that goal with three days left. I’ll certainly be watching to see if they make their goal.
There is absolutely a market for paid services such as this. Ad based models are ultimately very compelling to a large user base because they are free, but it’s been proven out that a fee based service with better features or content can be a market force (cable tv, satellite radio, newspapers…ok bad example for now, but in the future we will become accustomed to pay for good reporting; I’ll touch on this in the future).
I haven’t been on Facebook for at least 2.5 years now. I’ve been on Twitter for a long time now. I think since 2008? I was just going back in this blog to find it, but I think it was pretty much simultaneous with the timeframe of development of this. I won’t focus on FB because it’s not really something in my wheelhouse anymore. As far as Twitter goes, as of now, I don’t really have any issues with the service as a free offering. They do have revenues, but how much revenues, I’m not sure. And they will change in the future to accomodate more revenues. That’s what startups like App.net are positioning themselves against, the ultimate alteration of a service that users really like now into something that they don’t like in order to accomodate revenues. This propensity intensifies if the company is public.
So I’m rooting for App.net to get off the ground. I think we need alternatives to free services. I also think that companies should make it very easy for users to port OUT there information and content they build in the platforms. They likely won’t do that as they want to “own” the content. In their eyes, the users and their output ARE the product. Paid services flip the script on that and make keeping the users happy (and paying) the primary objective, so the users ultimately get a lot more say. It’s pretty tough to complain about a free service, after all, it’s free.