Are the days of Web freeloading over?

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Renita Jablonski: If you or your friends keep your digital photos online at Kodak Gallery, it's decision time. Eastman Kodak says pay up by mid-May or say goodbye to your pics.

LA Times business columnist David Lazarus joins us now. David, what's behind this decision?

David Lazarus: Well, Kodak gallery is one of the leading photo repositories on the Web. They have 5 billion images stored, 70 million users. The problem is most of those users do not buy things from the site -- prints and CDs and whatnot -- they're just keeping their photo albums on the Web. Kodak has responded by saying hey, the free ride is over -- if you have 2 gigabytes or less stored online, you'll be paying $4.99 a year at least. If you have more than 2 gigs stored, you'll be spending $19.99 a year at least for the privilege. Or -- and this is a big or -- your photos could be deleted.

Jablonski: So is this the end of, as you call it, freeloading on the Web?

Lazarus: Well, that's the big question, isn't it? We're seeing a gradual transition of formerly free services introducing fees. Craigslist, for instance, used to put anything up there for free, now a number of the listings come with fees attached. Basketball superstar Kobe Bryant has reintroduced his Web site with a $49.95 a year membership fees. So clearly, fees are the gradually coming out. And the question that I posed in my column is, what about things that we all take for granted -- free e-mail from Yahoo and Google and Hotmail -- what if fees start getting attached to all of that?

Jablonski: Well, what if they do? I mean It's happened before, and you raised ATMs as an example of this.

Lazarus: I thought ATMs was a really good parallel. When they were first introduced, the banks had no fees attached to them, the idea being that they wanted you to get very accustomed to this technology and get away from thpse very costly tellars. And then in 1988, the fees started coming out for out-of-network cards. And then of course, we all know, the banking industry -- a fee to talk to the tellar, a fee to get your canceled checks back and on and on. I think it's a very good parallel for what we're facing in terms of the Internet, where things come out with no fees attached and gradually you see the fees starting to pile on as people start becoming accustomed to the technology and as the technology becomes a routine part of people's lives.

Jablonski: All right. LA Times business columnist David Lazarus. Thanks a lot.

Lazarus: Thank you.

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I am so disappointed in Kodak. I have stored--and BOUGHT--photos from the Gallery for years. I don't think it's fair to change the rules and threaten to take away people's memories. I'm going to be buying an archive CD of all the pictures I stored with Ofoto and then Kodak Gallery, but rest assured that's the last time I give that site any of my money. Shutterfly and Flickr will get my future business!

The free lunch isn't over completely. It's still being used by new players who want to establish themselves and a great way to do that is by giving away a basic service and then charging for upgrades. That's what Kodak should be doing, not chasing away its customers.

By the way, you can get 2GB of free online storage for photos, music and computer files. No gimmick. There is an opportunity to upgrade for unlimited service by paying a small monthly fee. But you still get the 2GB free if that's all you want. Details are at: http://www.artunderglass.com/online_picture_storage.shtml

I would be willing to sponsor this one particular podcast and have my logo appear beneath it on this site and on all embeds.

But you don't offer thi$.

On Morning Edition, they pointed out a reduction in price - Apple's iTunes, the Internet's dominant digital music retailer, is using a three-tier price structure: 69 cents, 99 cents and $1.29.

Lowering prices on some songs sure takes out the sting of increasing prices for other songs.

But Kodak is going from from free to the moon.

How ridiculous and uninformed is that?

No one will stay with Kodak, not when there are dozens of sites that are free and provide the same quality of service. Has anyone heard of Flickr?

Kodak should think about ways to get their audience to spend money not threaten them with excommunication.

They have 70 million people who are now linked to them - putting it on par with MySpace. But MySpace - a free service - is making money because they are catering to their audiences needs.

Wouldn't the smart prudent thing for Kodak to do is say that to keep your stuff on our site, we'd like you to buy a certain amount of product, say $5 worth every year. I would think it would be a great marketing campaign to encourage people to make prints of their favorite photos for keepsakes and nostalgia.

Instead the hammers comes down
They compare fees for email to charging ATM fees, once a free service.

Good point. Once the audience tries out your free service, they will pay for it if it's worth it and they have no other options - like the inside scoop on a basketball phenom's life.

But going back to the whole reason for the interview - Kodak. I think they will take a beating because you can't charge a fee for things your competitors give away for free.

I am so glad that I caught this piece on Marketplace, because I have suggested to many people that once the banks get people locked in to using the computers, they will start charging. Then the price of a 44cent stamp will again look like a bargain.

Kodak might be a little ahead of the curve and the first to test the waters, but seeing how the company is doing is not unexpected. A wiser move would be to charge people who store images on Kodak Gallery if they (or their friends who views/use them) have never use any of their pay services (order print, etc.). If the stored images are generating revenue, why anger the customers. This fee could have been part of their business strategy all along, who knows. If they don't get a big backlash, watch the other follow. There's never a free lunch forever.

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