I have been writing this post in my head for a while after I was catching up on the drama that unfolded with Jason Calacanis and the people at Comscore.  If you have no idea what I might be talking about, you can read all about that flap on Jason’s Posterous blog, and certainly the echochamber that ensued following as compiled by Techmeme and listed out by Jason.

In the tech world online and in social media circles we have been trained that we can do a whole lot of things for very little, and in most cases, everything we want to do has a “Free” application associated with it.  Things like YouTube, Blogs, Twitter, Facebook, Flickr, and a plethora of other things we “sell” to clients and companies that come in our toolkit we obtained for free or for very little investment.  Our investment at this point has been the time it takes to understand and implement the use of such tools.  This has been a very lucrative part of being a social media consultant and I suppose why you cannot swing a dead cat in a room and not hit one or two of the “experts” in our business.  Free is always easy to sell.

I have talked before about “The Problems of Free“, and I also talked about how companies are using free as a business model. I want to turn back to the discussion or debate related to Comscore.  We have begun to expect companies to provide services online for free or for very little cost, and as I see it that proposes a problem somewhere in the chain.  Comscore cannot compete with Free.  Someone has to pay for free.

If you are providing a service online, or if you have the latest cool application and you offer it to your users for free, how do you make money?  I often ask many of the startups that come to me what their revenue model is and how they plan to make money.  This is usually followed of course with “How are you going to pay me?”  I am not yet providing “Free” for my own services.  Many companies have long drawn out plans with “ad revenue”, affiliate marketing”, or worse yet I get a blank stare of “we have not yet come to that part of the business plan.”

In the end, you have to pay for the service you provide, be it your time, servers, salaries, and long lunches at In-N-Out.  Comscore is having the problem explaining that they have to pay their bills.  We have to give our stockholders a piece of the pie and we have to pay our salaries and everything associated with the costs of giving you what you want.  They are not able to barter it all and they certainly cannot ask their employees to do it out of the goodness of their hearts, so they have to charge.  I am not sure whether Jason or anyone else has really come up with an alternative to charging for Comscore’s services, other than perhaps the aforementioned ad revenue or the like.  Someone has to pay for the free in the chain of the exchange.  The problem that I see is that Comscore is asking the customer to pay when others are offering it for “free”, but even in that instance, someone is paying for the free.

Photo via Photos8.com

We are beginning a season of acquisitions and mergers it seems as we hear today with Amazon ((NASDAQ:AMZN) purchasing Zappos for a reported $807 Million. I congratulate Tony and his company of the purchase and it could not happen to a nicer group.  With that said, I am a little cautious about the future of Zappos.  I am of the opinion that you cannot buy goodwill.  Your trust or reputation must be earned.  Zappos has done that.  They have placed customers first above all else.  What has that provided them?  The ability to be purchased for a large sum. 

I can see why Amazon would want to put this jewel in their own crown.  They are a decent company on the trust scale in my opinion, but they don’t have the customer in mind when making decisions.  They are a publicly traded company that has one thing in mind, making profit.  That is not always the first thing in the minds of the folks at Zappos.  They were able to be a profitable company because they were a decent seller of goods.  Amazon consumes them and perhaps snuffs out the reason Zappos was a retail darling of the Internet.  Now I may be wrong on this account but if Amazon takes the approach of Zappos in how it does business and its customer focus, watch out.

You can read the release and judge for yourself.  Can you buy the goodwill and trust?  I like the quote:

“Zappos is a customer focused company,” said Jeff Bezos, Founder and CEO of Amazon.com. “We see great opportunities for both companies to learn from each other and create even better experiences for our customers.”

From that I hope they adopt the Zappos culture and way of dealing with customers.

UPDATE:  I wanted to add this video that has surfaced since my post.  I think it tells me a lot about how Amazon may approach this brave new merger.

Tags: Amazon, Zappos, Internet Retail, Customer Focus