The Golden Rule of the Internet

If the service is free, you are the product. This is the golden rule of the Internet.When you browse free sites and use free apps, think about this rule and ask yourself how these sites make money. Most sites include ads on their site or charge you for certain content in order to generate revenue. But there are less obvious ways sites generate revenue and we’ll show you some of the basic models below.

Selling Your Data to Advertisers

Sites like Google, Facebook, and Yahoo are free because they collect information about you to sell to advertisers. Every search you do or page you like gets put into your demographic profile. Advertisers then target these demographic profiles. Google and Facebook aren’t just collecting the data though, they also run their own ad auctions where companies bid for placement on your search results, or on a page you’re visiting.

Freemium Sites

Some sites offer a free plan as a way to get you to test their service, or offer a limited experience as a way to get you in the door. They hope that someday you will need their paid service.

Affiliate Sites

Review or editorial sites make their revenue off product links within their content. The links have an extra string attached so that when you click the link and buy the product, the site makes a small commission off your purchase. Affiliates are 3rd-party marketers.This model lives and dies by trust. The review site is incentivized to sell you the product because they will make money.People that make money off affiliate links should be upfront, and as transparent about their role in reviewing the product and their status as an affiliate.

Partnerships, Sponsorships, & Acquisitions

Some sites and applications can stay free because they have a partnership or sponsorship or have been acquired by a larger company. The sponsor/partner gets to have an exclusive byline and is also able to collect your data. Mint, an online financial tracking tool which started in 2006, was recently acquired by a larger financial service Intuit. Intuit's name is now included on Mint's logo.

Emerging Methods

Influencer Social Media Account Product Placement

Movies and TV shows have been doing product placements forever. They’re usually pretty obvious like an action movie that lingers on the car’s logo a little too long during a chase sequence. That car company paid the movie studio for that product placement. People that have large followers on Instagram, youtube, or their blog are increasingly making a living through product placement. Next time you see a Kardashian holding up a logoed product, know that they’re getting paid handsomely for that “spontaneous selfie” with that product.

Exceptions to the Rule

Every rule has its exceptions, let’s look at a few below.

Open Source

Some applications and services really are altruistic. Some computer programmers and developers share a belief that creating free open-source software and applications are a great way to learn and progress our society. Free applications allow underserved populations access to digital tools. Open source applications also mean that the code can be seen by anybody. This can be great for security because anyone can see under the hood to look for vulnerabilities.

Hobbyists

Some people just put out applications as a hobby or passion project. They might not have a monetary incentive and are happy to know that they created something and that it’s being used.

So what about Edwin?

We are currently an exception to the rule as we are still just starting out. We will soon be looking for ways to make this project sustainable in a way that doesn't compromise your trust or over-run the site with ads.