Lifecycle of Free Internet Services. In memory of Google Latitude
Two weeks ago Google retired Google Reader. One week ago Google announced that they retire Google Latitude and offline maps.
While it certainly did not make me a happy Google user, it made me start asking some fundamental questions about the lifecycle of free internet services as I start seeing familiar patterns.
I will focus on services oriented to the mass audience.
From a concept to market. While developing a service the owner has to have a rough idea what functionality the service should have when making it available to the audience and what is the business model. The owner has to choose the audience growth vs revenue. With the current technologies one does not have to have too much money to make a service available to the audience. Thus, there are many new entrants, often motivated by some cool technology and inflated expectations. It is not uncommon to postpone the decision about the business model.
Introduction to the market. The service is ready and cool. The owner uses it, recommends their friends, asks friends to recommend the service their friends, collects feedback, improves, and so on. If the owner asks themselves about the business model at this point, the choice is obvious, let the service be free to support the user base growth.
Growth. The user base is growing. In order to keep growth new features are needed to attract new users. Now the owner cannot do it themselves. Need more development, support, operation costs are rising. If the owner has enough cash, it looks like the growth is a good problem to have. If the owner does not have enough cash, the owner either have to search for some funding, start charging for the service or just face the painful decision. If the owner starts charging for the service, this is the first moment of truth what the service is worth for. There are alternatives. For example, introduce a paid premium service or try to gain non-monetary benefits like make use of collected data (initial or ongoing).
Maturity and Crash. At this point all excitement about the cool technology disappears. There is no too much to do on the product. Just fixing bugs here and there. The market is saturated now. Very slow growth. If the owner did not think about the business model, now this is the most important question. This is when services get discontinued. The owner at best has some experience and moves on to a new service to repeat the cycle all over again.
Not all services get discontinued. Making the right decisions and thinking about the business model, first of all, in the early stages is a key for the success. Do not let your excitement to suppress your wisdom.
Google Latitude and Google Reader are good example of this lifecycle. None of the services had a good business model, if any. Google Latitude collected some geospatial data from the users. Google Reader collected some user reading preferences. Google could not monetize that in any way. So they decided to discontinue the services. Somehow, that reminded me removing features from MapQuest after AOL acquired it. We all know what happened with AOL.
Another example. In early 2000 free email providers started removing POP3/IMAP access. In 2007 Lycos decided to delete all of customer’s email.
This should be a friendly reminder to those who uses free, but unsustainable services. If you use a service to keep your family pictures, remember to may go black. Email, calendar, contacts, important documents… The same thing. We have a sheer number of free well known services with a large user base, but are not profitable. It is just a matter of time when their owner decides to put a plug. And to add an insult to an injury, it is difficult or impossible to get your own data back.
Those who offer services should not only have a clear and sustainable business model, but also make sure that their users know the value they get from those services. Ideally, service providers should help their users to gain even more from the services.