I just happened to stumble onto an article by Mark Cuban and his take why everything that is free will eventually fail. He makes mention of some of the web’s favorite freebies such as Twitter, Facebook, and also Google. His theory is that there is what are called “Black Swans” who will have a better idea and end up kicking the other companies’ asses. Of course the “Black Swan” offerings will also be free. Interesting.

Mark Cuban also states:

For Google, who lives and dies by free, we don’t know who their BlackSwan company will be. But we all know it will happen don’t we? The only question is when. Of course Google knows it as well. Which is exactly why they invest in everything and anything they possibly can that they believe can create another business they can depend on in the future.  They are spending incredible amounts of money in search of the “next big Google thing.”  When their BlackSwan competitor appears, they won’t be in a position to compete with the newly presented model, particularly if it’s free based because their ecosystem has bloated to the point where they can no longer create anything for free.

Google is not unique. The same happens to all companies based on free.

The same will happen to Facebook, Twitter, pick any company who lives off of free.

It’s not that they can’t make money offering free. They can, have, and will. The problem is that they know that it’s literally impossible to be the king of the mountain forever. But that won’t stop them from trying. And that is exactly what will kill them.

I must admit that this is a powerful argument. But then one could also argue that this happens to powerful companies as well that made a ton of cash over the years. Yes, I am thinking of GM. But there are other companies, free and well paid, that have failed and gone out of business. Think dotcom bust and Circuit City

What do you think? Will free companies all fail?

Comments welcome.