On Business Models

Some time ago I read some news that made me think a lot about business models. Modern services are most of the time a non-sense business model; the vast majority is either free, or ads supported, or subscription-based. All of these models are not OK for most of the cases.

A note before starting: this is a very opinionated post that I wrote some time ago for my personal blog. I’m publishing this again because things have not improved at all; to the contrary, they are getting worse and worse.

• free apps or services are just nonsense because building software costs a lot. No one can afford to create and develop quality software for free. If they claim so, you can be sure it is a scam to trick users into something (usually trading personal data for cat pictures) and should be avoided like the plague. Perfect examples are social networks;
• ads-based is OK only when they do not play a key role in your life. Again, since it costs a lot to build them, they usually are designed to maximize users’ attention, which usually leads to unethical behaviour. Since it is difficult to tell whether the service provider is embracing bad practices I try to scarcely use them and stop before they become too important in my digital routine. A good example is causal gaming: I do play ads-based games, but when I feel they are too engaging I usually stop using them;
• subscription-based is fine, but I always try to be careful to choose services that can be suspended without issues; of course, an exception is the professional services that can be seen like consumable costs of my activity like SaaS. Perfect examples are Netflix, email, or Slack;
• fixed-cost is the business model I prefer for applications that require limited support over time or that do not run on live services or use very light-way service. I like to pay for quality services knowing that it will sustain their business ethically. Of course, since, not only it costs to build software, but also to support it over time, this business model is not suitable for expensive services that must be always online (like email). Anything should fall in this category, except for the very few that belong to the subscription-based or the ones that are trivial enough to be ads-based.

Of course, our society requires us to break some of the rules. For instance in Europe is almost impossible to live without WhatsApp, which is a nonsense-free app with a stellar implementation and an outstanding service. As a developer, I cannot help but admire its quality, but as a user, I must be scared because their business model is shady, at best.

Recently, I started Saasform, an open-source authentication framework that is specifically aimed at Saas, that deeply integrates the subscription-based approach. I hope that by reducing the technical difficulties and the friction necessary to set up a Saas, the number of good business models will increase.