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Comment by JohnAtCC | Hacker News Reader

How so? If the service is WORTH paying for, then it SHOULD be paid for. The world of service, if proven magnetizable, should always be monetized. #FreeMarkets

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The salami I try at Costco, as a free sample, is worth paying for. It is food, and it has value.

However, they give me a small sample as an inducement to buy; presumably to increase sales beyond a baseline, in quantities and at prices sufficient to cover the cost of not only the free food they give away, but the labor to do so.

Cloudflare can provide a free product that's WORTH paying for, if their paid product is so much better, and its sales increased by so much, that the free giveaway can be considered a marketing cost that pays for itself.

I'm a #freemarket guy and all, but freemium is a long standing monetization model that many companies have used to accelerate net profits in the long run. Not really anything anti free market about freemium. The problem with freemium has always been building the premium tier that someone wants to pay for :P

Markets don't equilibrate at the value to the customer any more than they equilibrate at the cost of production. They compromise between the two.

> Markets don't equilibrate at the value to the customer any more than they equilibrate at the cost of production. They compromise between the two.

No, they don't compromise between them, nor do they reflect one more than the other: the basic law of supply and demand is that markets clear at the quantity and price where the marginal cost to produce equals the marginal value to customers which also equals the sale price.

assuming a huge number of perfect circumstances which is not how reality works. Assumptions made for what you said to play out include: perfect competition, perfect information, perfect rationality of actors, 0 barrier to entry, that value and cost is strongly bounded and defined on either end, and much more.

Common examples that violate each one in term: Facebook, Used cars, Veblen goods, Utilities, Healthcare.

A market that has one large player that completely dominates certain segment(s) is not likely to be a healthy one that is providing value at near cost, why would it be? The incentive is always to charge as much as possible.

> assuming a huge number of perfect circumstances which is not how reality works.

I don't think there is actually an equilibrium price defined as some kind of compromise between supply and demand curves absent those circumstances, either; there's an actual price at any given time, but it's not an equilibrium (particularly, without rationality—which incorporates perfect information—you don't have any expectation of an equilibrium even if all the other factors are present, at any price.)

Once you are discussing equilibrium—as the post the grandparent addressed did—you are implicitly discussing at least some of the ideal circumstances you’d like to negate.

The market can still reach equilibrium even with non optimal conditions, just not the "efficient market" equilibrium.

Additionally, irrational does not mean unpredictable, after all advertising is extremely effective.

It’s quite possible that cloudflare gains more value from the customers than they gain from cloudflare.

For instance? (Honest question)

> Free customer base—Free customers are an important part of our business. These customers sign up for our service through our self-serve portal and are typically individual developers, early stage startups, hobbyists, and other users. Our free customers create scale, serve as efficient brand marketing, and help us attract developers, customers, and potential employees. These free customers expose us to diverse traffic, threats, and problems, often allowing us to see potential security, performance, and reliability issues at the earliest stage. This knowledge allows us to improve our products and deliver more effective solutions to our paid customers. In addition, the added scale and diversity of this traffic makes us valuable to a diverse set of global ISPs, improving the breadth and economic terms of our interconnections, bandwidth costs, and co-location expenses. Finally, the enthusiastic engagement of our free customer base represents a “virtual quality assurance” function that allows us to maintain a high rate of product innovation, while ensuring products are extensively tested in real world environments before they are deployed to enterprise customers.

It adds latency to API services, it doesn't add value in conditions where you aren't under attack. It inhibits legitimate users with privacy controls (and/or Firefox) in place.

It may or may not be worth it, but it isn't a panacea.

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