Closed environments, open environments.

This is a very trendy topic nowadays. An open Internet usually means free, while a closed net often refers to paid systems.

Closed environments are linked to groups who are interested in something very specific that is not interesting for the general audience or who prefer to communicate with certain people in a restrictive manner. The typical example is doctors’ environment. They prefer to intercommunicate with other colleagues with no barriers, knowing that the rest of the population has no access.

If you get added value for entering an exclusive group, why not charging a fee for the service? You may have many reasons for not charging a fee but the important thing is that you could do it.

Generally, when we think about the Internet we think about non-paid access. You can keep something free if the costs of obtaining it are 0 or in the field of 0. If it involves any cost, you will have to charge for the service sooner or later; otherwise the business would have to close. Sometimes you earn an intangible (recognition, self-satisfaction for being part of a group, feeling of solidarity, because you feel like it, etc.).

When we talk about free we get quite often into contradictions. Because many of the services we consume, basic goods, etc. are not free. We have to earn our living.

There is no doubt that the so-called “Internet Revolution” is happening in Social Media in places like Facebook –with 500 million users, Twitter, Flickr or Youtube. In other words, open environments. Monetizing? And what about the Revolution? Interesting debate.

Video games producers have realized that many of their products are going to be hacked. For this reason their strategy is to launch basic and free videogames first to reach most of the audience and offer a premium version for “heavy users” that are looking for better quality videogames. We are then talking about open environments for getting traffic and closed environments for those who are willing to pay for a more sophisticated version.

The controversy on all this came up on a very interesting conference that took place in the last FICOD  (Madrid, October) (International Digital Content Forum). The speakers were representing very different and important communication media. Each speaker showed its specific commitment to play a role on digital media. They explained how they intended to offer a service in this environment and how they intended to get income out of it. The impression I had was that income was quite behind the investment and expenditure incurred; but I also got the feeling that they have begun to see the profitability path. The response of part of the audience was a requirement of better products and services, open and free.

There is no doubt that a customer will prefer a free service rather than a paid one if he does not appreciate major quality differences. The problem is on the supply side. Is there anyone willing to offer a free service as good as the paid service offered by another provider? You cannot offer a paid service if somebody offers the same service with the same quality for free. 

You cannot open a sweets shop on Halloween Day.

Market and time will put, both suppliers and customers, in place.

Cost is the key. On the long term you cannot offer a free service. Someone has to pay for it, one way or another.

Several projects in the wine world have chosen to go for closed environments, others for open environments or even for mixed ones. The debate is open. Are videogames a sector to take as a good example?

This post in Spanish: No puedes abrir una tienda de chuches el día de la cabalgata de Reyes