I was talking to Chris Casey at last night’s NGP happy hour about the fact that Meetup will start to charge a monthly fee for their services—services which facilitate the creation and management of groups and their meetings online. In the world of political campaigns where my company has expertise, Meetup has become a fairly common addition to political websites. But the new fees have already produced controversy and will apparently move many people away from the product and hasten the development and adoption of alternatives.
As a former programmer and the owner of a political software company, my perspective is different than those who are up in arms about the change. It suggests to me that Meetup is trying to generate revenue to pay their employees so that they can continue to offer their services. If my company produces a product, we need to be able to charge something for it, or for services associated with it, or we cannot remain in business. I do not know any specifics about Meetup’s business, but I do not think that everyone who charges for a technological service is a profiteer.
Because the political candidates that use our software have a great mission, some of them believe that we should work for them for free, or close to it. In many cases, we would love to do just that if we were legally able. Our problem is that even though my employees work for noble causes they still need to earn a decent living. So far, we have had to pay our staff to write the software, document it, keep making improvements, and take technical support calls with good humor. We have also had to buy the computers on which it is developed and servers where it is hosted, pay a data center for the bandwidth and rackspace, and IT whizzes to keep the computers happy. In short, all of this costs money. The question becomes how to generate enough revenue to cover those costs.
As a consumer, I like getting things for free. Entrepreneurs who manage to provide a solution without directly charging their users always impress me. Google does not charge me to do a search, nor Yahoo to check a stock quote or read the news. They sell access to their users through advertising or support their basic users through an additional level of service to high-end users that comes with a price.
In the political campaign market, some companies have made attempts to try such an indirect revenue model. A few years ago, for example, a company had the smart idea of offering free campaign software. They would make money by selling banner ad space on the software screen to other vendors (“Buy your yard signs from Joe”). It may have been too early, or it may have been a failure of marketing or product, but absolutely no one used the software. As another example, some of my competitors now make money by taking a percentage of the contributions flowing through a campaign web site. This has been more successful, particularly because unsophisticated campaigns do not make the calculations about these buried costs. We find that the successful ones end up paying far far more in the long run. There are other experiments in the works with free or open source software that have not yet been tested.
In the meantime, until we at NGP are clever enough to find another way, we will have to continue to charge directly and openly for our services. And when I hear about things like new Meetup fees, my sympathies will continue to be a little more confused between customer and supplier than those of most consumers.