Money makin' money makin - web economics transforming

Today KCRW aired two stories that talk about pricing on the Internet.

The first was a reduction in price - Apple's iTunes, the Internet's dominant digital music retailer, is using a three-tier price structure: 69 cents, 99 cents and $1.29.

NPR's Morning Edition said the big music labels had been pushing for the change. It allows them to choose different prices for their songs — depending on the song's popularity. Lowering prices on some songs sure takes out the sting of increasing prices for other songs.

The other story was a big price hike - from free to the moon.

Kodak, which has 70 million users (putting it on par with MySpace!), will soon start charging fees at the risk of photo deletion to store photos on its site.

Marketplace asks"Are Web fees for formerly free sites becoming the norm?"

How ridiculous and uninformed is that? No one will stay with Kodak, not when there are dozens of sites that are free and provide the same quality of service. Has anyone heard of Flickr?


LA Times business columnist David Lazarus said "the problem is most of those users do not buy things from the site -- prints and CDs and whatnot -- they're just keeping their photo albums on the Web."

So wouldn't the smart prudent thing to do is to say that to keep your stuff on our site, we'd like you to buy a certain amount of product, say $5 worth every year. I would think it would be a great marketing campaign to encourage people to make prints of their favorite photos for keepsakes and nostalgia.

Instead the hammers comes down: If you have 2 gigabytes or less stored online, you'll be paying $4.99 a year at least. If you have more than 2 gigs stored, you'll be spending $19.99 a year at least.

Again Renita Jablonski: "So is this the end of, as you call it, freeloading on the Web?"

Craigslist in San Francisco charges $150 to post a help-wanted ad. Kobe Bryant charges a $49.95 a year membership fee.

Lazarus then asks: "What about things that we all take for granted -- free e-mail from Yahoo and Google and Hotmail -- what if fees start getting attached to all of that?"

They compare fees for email to charging ATM fees, once a free service.

"I think it's a very good parallel for what we're facing in terms of the Internet, where things come out with no fees attached and gradually you see the fees starting to pile on as people start becoming accustomed to the technology and as the technology becomes a routine part of people's lives," Lazarus said.

Good point. Once the audience tries out your free service, they will pay for it if it's worth it and they have not other options - like the inside scoop on a basketball phenom's life.

But going back to the whole reason for the interview - Kodak. I think they will take a beating because you can't charge a fee for things your competitors give away for free. In today's world you have to be much more clever, and much more appreciative of your audience.