Which is better? & Why?

My fundamental thesis is that platforms need to have aligned financial incentives with their ecosystem of users and developers.

If their are unclear financial incentives at play, it can lead to "prisoners dilemma" style defections.

I believe these defections are not the result of individual bad actors running the platforms, but rather rational self-interested behavior playing out.

If the chessboard is setup with *indirect* financial incentives for the platform to protect its user and developer ecosystem, bad things will happen when the platform becomes desperate to hit the revenue expectations set by the company and investors.

My proposal is to attempt to frame social platforms cos more as "service providers" than "media companies".

Well, people seem to be happy to pay for backup and storage to ensure longevity of the service. Social/communication apps... Not so much.

When you consider a social network is a storage for all your contacts, photos, favorite videos, events, personal messages and more. Paying even $1/month would be incredibly good value and profitable. People would probably pay $1/ month to use Facebook, even with the ads.

Some people argue that paid for services have difficulty with growth. My response to that isn't that people have an issue paying, but rather they have an issue with *how* to pay. We've figured out how to sell bottled water to the masses, pretty sure this is doable.

I actually look at it less of free vs. paid debate and more that the way free apps/services usually choose to monetize basically sucks: advertising.

Google figured out how to make it work online in a massive way thanks mainly to intent. But it's still far from clear how the advertising model will work for other non-search based services. (And I'm still not 100% convinced that search advertising won't take a significant hit as the world moves mobile.)

We are seeing a backlash against free right now amongst certain groups, but I believe it will continue to exist and dominate. It's the established way to get massive scale quickly. You can't shove the genie back int he bottle. The monetization layer just needs to be fixed.

Focused discussions which are hosted over excellent platforms such as Branch, Quora and Twitter, have a large enough leverage to enable their users to build and extract values from the discussions. The key success factors to such platforms are the contributing users and the quality of contents in the network.

These factors would be enough to justify some people to pay for a membership access to these platforms.

That true, but would you have offered to pay for the invite? I'm tempted to put invites to this discussion on GumRoad.

Branch is an example of a business that needs to be profitable and sustainable. It is up to them which revenue model they will use.

If Branch chooses paid memberships as their model, it would limit the number of users that are willing to join and contribute. These users have to put their trusts to the network (and the other users) that their financial investments would yield into quality discussions (and other results) they might expect. If Branch chooses to be ad-supported, I'm afraid we will also have a very low signal to noise ratio.

I believe that there exists a threshold for a critical number of paid users that a platform like Branch needs to cross to be both financially sustainable and excellent in content quality.

In many ways, I don't think the issue is cost. People have come to genuinely value the channels of discussion and self expression.

For example, and I've written about this before. Napster was the free –albeit illegal– equivalent of Spotify. It started the discussion about on-demand music. Spotify came along with a better solution, but you just have to buy them a coffee once a month to use it.

We're seeing the same trends with tv/movie streaming. And I don't think it's all ridiculous to say we'll see the same thing happen to other popular sites. In a way, we're already paying to access these sites, via the cost of our hardware and data connections.

I believe it's about responsibly educating the notion of paying for a service.

@Youssef: I don't buy Spotify coffee and I love using their service.

@Eric: Metafilter and other discussion sites offer both paid and free memberships, with extra features for paying customers. Would that cut down on the noise without limiting contributions?

@MG: Yea, mobile advertising sucks. The trend I've noticed is that freemium model tends to make the most money (look at the number of free apps in Top Grossing on iOS).

News is moving in the same direction for exactly the same reason (web ads suck so much a pay-wall is a better option financially). In terms of self-published, non multimedia content (video ads still work for YouTube), mobile lets you gather better data. A FB check-in can prompt a Yelp offer w/o being intrusive.

@Chris, is a pay-wall *really* a better option financially?

The only data I have to show you is that existing sites have kept their paywall (The NY Times has kept theirs in place; if revenue went down substantially and stayed that way, I doubt they would have continued to use it), and that other sites are copying their model (Haaretz just implemented one and is directing people to their iOS app).

Desperation may be driving this to some degree, but the finance guys can still do the math.