• Blog Maverick, Monday, July 6, 2009 2 PM

"The problem with companies who have built their business around free is that it is far from free to remain successful," notes Mark Cuban on his blog. "The more success you have in delivering free, the more expensive it is to stay at the top." It's a vicious cycle, he says. The more success you have, the more important it is to maintain that success, which means spending more money on new infrastructure and new sources of revenue-"all of the things that will prevent (companies) from staying lean, mean and flexible," Cuban says. "All of the things that distract them from innovating within their core competency."

Indeed, "there will always be a company that replaces you," Cuban continues. "At some point your BlackSwan competitor will appear and they will kick your ass. Their product will be better or more interesting or just better marketed than yours, and it also will be free. They will be Facebook to your Myspace, or Myspace to your Friendster or Google to your Yahoo."

As for Google, which lives and dies by offering free products, "we don't know who their BlackSwan company will be," says Cuban. "But we all know it will happen don't we?" Meanwhile, as Google frantically searches for the next big Google revenue stream, Cuban warns that "when their BlackSwan competitor appears, they won't be in a position to compete with the newly presented model, particularly if its free based because their ecosystem has bloated to the point where they can no longer create anything for free." The same will happen to Facebook, Twitter and any other company that tries to make money off of free.

Read the whole story at Blog Maverick »