It almost seems like common sense, but 37signals' Jason Fried had some specific words for those in attendance at this year's Future of Web Apps conference in Miami, Florida: the future is not free.

Continuing on, his point is that companies need to turn away from the business model of pump-and-dumping free applications to a gleeful audience.  Open-source and free software might be an excellent means for attracting attention and eyeballs to a product, but now is not the time to pack alternate revenue strategies around these concepts.  Advertising and other extraneous revenue add-ons are a distraction that pulls a company away from developing benefits for its customers, argues Fried.  It's time to shift back to a meat-and-potatoes business model, and that involves selling a product that contains enough quality to make an audience want to pay for it, even given the current economic difficulties.

But that's not to say that there isn't a place for free software in the modern business model.  A company needs to consider the distinction between people who would use an application for nothing versus those would actually cough up the cash.  That's where Fried's concept of a high-quality product comes into the picture.  Instead of turning away from development to focus on external revenue add-ons for free software, Fried believes that companies need to focus on churning out high-quality software development.  That's the 37signals model, at least: 90 percent of the company's revenue comes from Web applications like its Basecamp project management system.  The rest is split between advertising, job listings, and other miscellaneous income like books.

It's a compelling argument that's already played out in the open-source world on both sides.  Consider the case of Adobe's Photoshop: It remains the dominant graphical platform even given the alternative of open-source alternatives like Gimp.  On the flip side, look at Google.  The company accrues massive amounts of traffic and interest with its free Web products.  It then sells this rapt audience straight to advertisers, although the argument can be made that Google has yet to find success beyond its money-making search tie-ins.

So is the future free?  I think Fried's point finds its best applicability as a recommendation.  Splitting the difference always feels lame, but it's exactly how the future of Web-based business could play out.  A company needs both sides to generate the greatest combination of appeal and profit: free software that can attract interest, balanced with a strong revenue generation mechanism that isn't just tied to third-party services with no relationship to product enrichment.  Get the eyeballs interested, then offer them a quality product for consumption.  Or as Fried puts it in an interview with the Chicago Sun-Times, "Free is OK as long as you have something to sell."