The beginning of the end of Free?

Free, thanks to Brad Stabler

Over the holidays there was a flurry of excitement, particularly among OpenStreetMap fans, prompted by Ed Freyfogle’s announcement that Nestoria were switching from using the Google Maps API to using an OpenStreetMap tile service provided by MapQuest. The switch was prompted by Google’s announcement in April of last year that they would be introducing some volume limits on the usage of the free Maps API:

“We are also introducing transaction limits on the number of maps that may be generated per day by commercial Maps API web sites or applications. These limits are documented in the Maps API FAQ and will take effect on October 1st 2011. Commercial sites that exceed these limits may be required to purchase additional transactions or a Maps API Premier license…

Not for profit applications and applications deemed in the public interest (as determined by Google at its discretion) are not subject to these limits.” (My italics)

Nestoria have been a long term supporter of OSM and as Ed says the introduction of the new charging regime was the trigger to move away from Google:

“Having always envisioned that we would someday move to OSM, this was the nudge that pushed us over the cliff.”

The new limit is 25,000 map sessions per day averaged over a quarter, which equates to 9m sessions per year. Google expect 0.35% of the sites using the free Maps API to be impacted which I reckon is between 1200 and 1400 sites. Big respect to the Nestoria guys for growing their business to this level but perhaps a note of concern for the many passionate advocates of geo (myself included) on the economics of incorporating map services in applications where revenue per page is on the low end of the spectrum.

I don’t know why Google chose to introduce these limits, it could be about the costs of delivering the service (hardware, bandwidth/power or data licenses where Google is using 3rd parties) or it could be a drive by the commercial team to increase sales of Enterprise licenses. Probably a bit of both. It sounds like the commercial approach may have been a bit less than optimal but no doubt Google will adjust their approach (and possibly their pricing) if they want to  retain some of these large usage sites or we may see the more aggressive introduction of context sensitive advertising directly into the map although we have heard little more about the trials of map ads in Australia.

OSM advocates have been understandably chuffed that Nestoria considered OpenStreetMap to be as good or better than that offered by Google and it’s data providers, no doubt OSM has come of age as a viable royalty free source of geodata. In my opinion the focus on open vs traditional geodata ignores the broader scope of Google’s Map API which offers quite a bit more than just a map tile service – geocoding, directions, Streetview, local search and perhaps most important colossal scalability. What interests me about Nestoria’s decision is the choice of MapQuest rather than going with a self hosted tile service based on OSM which they explained:

“When we realized it was time for us to make the move we faced one big decision – should we use someone else’s OSM tiles or should we render and serve our own? We called in an expert to advise us. OSM expert, and former Nestoria blog interviewee, Andy Allan … Rendering has the advantage that you can make the map look exactly the way you want. When done well this can produce phenomenal results … but unfortunately it’s no small technical undertaking, especially when we’ve also got a property search engine to run.

We concluded the only viable path was for us to leave the rendering and serving to experts and use someone else’s OSM tileset… Luckily however several companies have stepped in to fill this gap –CloudMade has for several years offered an OSM tile layer for all to use. In 2010 MapQuest released a similar service. While we are longtime fans of CloudMade (we use their tiles on our Where Can I Live? service), for their global infrastrucutre and speed we decided we’d prefer to use MapQuest’s OSM tiles.

What’s in this for MapQuest? I imagine that the publicity and goodwill are worth quite a lot to them (but that was what many people thought was the motivation behind Google’s free API for the last 6 years). Presumably the cost and complexity that Nestoria identified are shared across a large user base for the tile service but as uptake grows the costs of servers and bandwidth must become a factor in the economics of their free tile service. I wonder how long it will be before the bosses at AOL (ultimately the very commercially astute Arrianna Huffington) start looking to monetise the usage of their infrastructure? Will it be “in map advertising”, alongside the map advertising or is their some other model? At least if you have architected your service in the way that Nestoria have, you can quite easily switch from the MapQuest service to someone else’s if the terms change in the future.

I can imagine a scenario where a number of the 1200 odd commercial sites switch to MapQuest or Cloudmade only to find that these guys with much shallower pockets than Google will struggle to support their levels of usage and functional needs (routing requires a quite a lot of processing for example) on a free model. Of course they can  then start to roll their own map services with something like MapBox or building their own tile service and hosting it in the cloud but then they will start to incur the direct costs plus the overheads of supporting their service. The guys from MapBox promoted their service as an alternative on twitter:

“With our new add-on packages, you can easily bump up your storage + bandwidth And it’s 12x cheaper than Google Maps”

When I queried this they quoted their cost per thousand extra map views at $0.32 compared to Google’s $4.00 but I think that ignores the Google’s free service offering 2.25 maps per quarter before you hit the charge or the need to have quite a lot of technical skill and understanding to set up a tile service. That said MapBox is an interesting open source based service that woud appear to offer a low cost solution to serving tiles with the benefit that you can style those tiles to your own designs. I’d be interested to understand the economics of this kind of business model, presumably over time it will get driven down to pretty low prices but will never be free. Look at web hosting, prices for a small site ca be as low as £2/month and you can get quite a powerful server from Amazon for about £35/month but as far as I know no one is offering large chunks of infrastructure and bandwidth for nothing.

So is this the beginning of the end of Free? Not quite yet, but maybe it’s time to recognise that a free ride may not last for ever and perhaps we need to think a bit about what price we are willing to pay for a map service. This comment on the Nestoria blog from another business affected by the change in Google’s usage terms summed it up for me:

“In our case, that meant paying $200,000-$400,000 a year for maps…

Google got their pricing off by at least an order of magnitude. I don’t know many companies making more than a couple of dollars per thousand views. Had they charged us $0.20 per 1,000, we would have gladly paid.

In the end pricing is a trade off between the value to the purchaser and the costs of production/delivery, even competitive pressures cannot reduce long term costs to zero unless the providers find a different revenue model, which could bring us back to “in map adverts” and I doubt many large commercial users of maps would want to be potentially hosting adverts for their competitors in return for free or very low cost maps.

I wonder whether within a couple of years a modest fee say $250-500 per million maps will become the going rate for a high availability map service with some additional costs for directions and other features. Time will tell.

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