Monday, July 9, 2007

When You Pay For Something That's Free

There's been a lot of techie hype over Kevin Rose's lastest start up. (Kevin Rose is the founder of Digg). Pownce is a P2P way to send "messages, files, links, and events" to your friends. But outside of this, is the fact that Pownce is still in Beta. Not much different than other Web 2.0 companies and to limit their testers Pownce is only letting folks with invites join. Again, not much different. What is different is the artificial marketplace that has surfaced because of this. Remember Gmail? Gmail invites at one point were hitting $200 on eBay. Now Pownce invites are ranging from a starting bid of 1 cent to a buy it now of $9.99.

I'm not sure who is posting these invites for sale, but could it be Pownce's own team? While Pownce cannot charge (it would be against the Internet's business model), folks with invites can create an artificial market and therefore make each free invite somewhat valuable. If they can do this demand is going to outstrip supply, which will create a buzz around this "free" product.

I don't think that Pownce has the name recognition that Gmail did at this same point for it to work. Also, how many people are willing to pay for this? It's not the same as Gmail which is interoperable with other email addresses. Right now there were 3 bids for Pownce invites and other sites like Mashable and Techcrunch give these invites away for free.

We'll see how this strategy works, I wouldn't be surprised if it backfired, although some blogs have picked up on the artificial marketplace....

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