Can Paid Online Services Compete?

Yahoo, Google, MSN, AOL, Facebook, Myspace, etc, etc. All these big online sites with lots of page views that serve advertising are innovating faster than I can keep up anymore. I can't even keep up reading about what they are doing.

Not only that, they are innovating and giving it all away.

I am starting to realize that anything that touches the consumer has to be free. If you want to launch and run a consumer facing service (the more obvious applications to write for any developer or company that relies on advertising as their revenue source), you have to give it away.

Why? Two things that I saw yesterday made me concerned for the future of the paid online service as a software web.

1. Yahoo launches a trip planner that allows consumers to plan a trip and share it with friends. If that isn't a natural *VIRAL* seller of travel services, I don't know what is. And coincidentally, Yahoo has a meta-travel search engine that they can monetize this free service with. And further, Yahoo has every travel provider as advertisers through either their PPC or their impression based advertising program. Hello AAA. I mean, goodbye TRIPLE A.  ANd life just got a lot harder for these guys.

2. Facebook (good review by Jeff Clavier) launches unlimited storage of photos. Yesterday, a college student (you have to be one to use the site. How age-ist.) showed me how you can tag parts of a picture with words or names, so that other people can then identify who is in the picture. Will Riya ever got off the ground. Or will myspace buy it before they launch?

3. This take on Googlebase.

These big guns, rolling in their ad revenue, are launching new consumer services monetized by impression, affiliate, ppc and their own transaction based services - at a breakneck pace. And who knows what they'll do next. So, if you are playing in the game, you have to be thinking free and ad supported. Elsewise, you run the risk of being left in the dust.