In August of 2008 Khris Loux, our CEO, wrote a post called ‘The cost of free widgets‘ which outlined 3 ways in which ‘free’ products – particularly products you embed on your site – always have a hidden cost.

In many cases the cost may be perfectly reasonable, but it’s important that publishers go in with their eyes wide open when it comes to calculating Return on Investment.

In the article, Khris outlined three ways that Free widgets may sap value in other ways. They were:

• Lack of Data Portability
• Lack of Identity Controls
• Cannibalization of Audience

Today, Phil Wainewright, over on ZDNet, has written an excellent piece taking the notion further and relating it to SaaS software of all kinds (Widgets can be considered as Software as a Service).

He explains that Free or Freemium models can have costly impacts for businesses by outlining 4 key reasons:

1. Lack of access controls (Multiple moderators, variable access rights etc)
2. Lack of Instrumentation (A focus on mass market sometimes means a dilution of focus on the things top tier customers care about like uptime, support etc)
3. There’s no such thing as a free lunch (If there is no business plan – or an opaque business plan – then what is the long term viability of the vendor)
4. Limitation of innovation because only the big guys survive (Many small players fade away or get sold for pennies leaving customers to fend for themselves).

At Echo, we believe that Phil is correct. That’s why even our most basic product costs $12. Our business model is clear, our revenues are real, and our intention is to provide a product whose design goals are aligned with those of our customers – not advertisers or any other constituents who might ultimately/indirectly/secretly pay our bills.

We believe this is the surest path to a strong partnership that can grow long term and we’re proud to have our partners and customers count us as among their fee-for-use vendors.