The utility of the network is tied directly to how many people are on it. If you add people, if you charge people for that, you add friction to them joining. So at least at the start, it needs to be free. But even if you get to a terminal value where you have everyone signed up, if you then put up a paywall, you're going to lose people and again reduce the value of the network. You're going to open the door for a competitor. And so the question is, is there a way of building something like this that doesn't require advertising?
In this week’s episode Ben and James discuss the problems with Ello’s business model, James’ discomfort with Facebook, and why Social Networks always have ads. We also talk about incentives and something surprising Ben learned from the notorious Episode 18.
Links
- Ben Thompson: Ello and Consumer Friendly Business Models – Stratechery
- Ben Thompson: Facebook Launches Atlas – Stratechery (members-only)
- Ben Thompson: Friction – Stratechery
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