The new “economy of free” continues to push content creators of all types to providing free goods and services, and web 2.0 companies are challenged in trying to figue out how to not just live on VC money and actually turn a profit.

Matt Maroon thinks that the free economy will eat itself, and has posted a very insightful post entitled Bubble 2.0 that deserves a read.  Specifically, Matt is talking about software and related web 2.0 companies, but regardless of what you are selling (or giving away for free) I think Matt’s alternative view deserves consideration as well.

I think that at the end of the day, much of our new free culture is going to turn out to be just plain unsustainable. I’m predicting that we’re going to see a large number of high-flying startups crash, just like we did before. They aren’t currently flying as high or as conspicuously as last time, so the crashes will be much more graceful, but crash they will. This time they won’t depress the public markets, at least not directly, just hedge funds and private equity.

I have my own opinion, and think free definitely has a place in the business model, but I want to know what you think.  Can companies turn a profit on “free?”

This is a sad time for the web. It’s as almost somber as the time just before the last bubble burst in 2000. I was working in PR with dot-com startups at the time and the way I feel now is how I did back then. I wish I didn’t, but I do. Something needs to be said. Even if no one listens or cares what I think.

Social applications are exciting, and the buzz level is high to be sure.  I have been guilty of being a fanboy from time to time, but try to keep things in perspective.  Is it really as bad as Steve thinks?

What do you think?

Photo: Al-Fassam