Posted on September 22, 2008 - by Jeffrey

Who is going to pay when we flip the switch?

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I tend to talk about this a lot in my daily business discussions and I always encounter heat on it. The issue is simple:

There are so many great free services on the internet, one day these companies offering them are going to have to “flip the switch” so to speak and turn a profit. What will happen then?

• Will people just use someone else?
• What happens when no one is left to give away free stuff?
• Will most people just stop using these services entirely?

This is why it is so important to have a real business model in place or an actual product to sell. If you are just building a super cool service that feeds off of another awesome service with no business model in the hopes that you will get bought out, you may want to rethink you exit strategy.

This is where I see the future of internet business models:

Ad Sustained

We see this all the time and this is the common answer I get. The problem with this is that although it makes sense and is being employed all over the net, it is not always working. Yes it works for Google, for now… but plenty of companies are just using Google ads in their side bar while offering a cool and hip service. In my experience people look at these ads in the sidebar or header and just assume the company makes money. That’s not always the case…

Subscription Based

Ahhh… One of the first internet business models to work and still one of the most sucessful. This is by far one of the best models to employ on the internet if your business warrants it. There is nothing like having people sign up for some sort of monthly fee and just forget about it for like a year. I always signed up for stuff like this and would forget to shut it off, then a light went off in my head and decided that I needed a business like this. My thinking…there are plenty of impulse buyers like me and  only need a certain amount to keep a decent income. Hence, my first successful internet business.

Micro Payments

Still relatively new on the scene, micro-payments show a lot of potential for bringing in new profits on internet sites. Small one time payments for certain upgrades or cool icons/avatars hold a promising future in my book. You only need a little bit from a lot of people to successful. If you can get a repeat business growing with a micro-payment model, then you’re golden.