The Economics of Giving It Away - WSJ.com
In a battered economy, free goods and services online are more attractive than ever. So how can the suppliers make a business model out of nothing?
Free is not enough. It also has to be matched with Paid.The Long Tail - Wired Blogs
From Box UK, a survey of business models used by the top Web apps, most of them variations of ad-supported Free and Freemium. In the chart below, the largest segment (ITA) is ad-supported, the second largest (ISV) is Freemium. After that is referral (ITR) and then the sale of virtual goods (IPV), such as the gifts in Facebook.
A public diary on themes around my books
check out link to top 100 web apps
Terrific survey of free business models onlineFree to Freemium: 5 lessons learned from YouSendIt.com | Futuristic Play by @Andrew_Chen
Blog post, 5 lessons learned from YouSendIt.comSeth's Blog: Malcolm is wrong
People will not pay for by-the-book rewrites of news that belongs to all of us. People will not pay for yesterday's news, driven to our house, delivered a day late, static, without connection or comments or relevance. Why should we? A good book review on Amazon is more reliable and easier to find than a paid-for professional review that used to run in your local newspaper, isn't it? Like all dying industries, the old perfect businesses will whine, criticize, demonize and most of all, lobby for relief. It won't work. The big reason is simple: In a world of free, everyone can play. This is huge.
I've never written those three words before, but he's never disagreed with Chris Anderson before, so there you go. Free is the name of Chris's new book, and it's going to be wildly misunderstood and widely argued about.
"By refusing to build new digital assets that matter, traditional publishers are forfeiting their future."
In a world of free, everyone can play. This is huge. When there are thousands of people writing about something, many will be willing to do it for free (like poets) and some of them might even be really good (like some poets). There is no poetry shortage. The reason that we needed paid contributors before was that there was only economic room for a few magazines, a few TV channels, a few pottery stores, a few of everything. In world where there is room for anyone to present their work, anyone will present their work. Editors become ever more powerful and valued, while the need for attention grows so acute that free may even be considered expensive. Of course, it's ironic that sometimes people pay money for my books (I view them as souvenirs of content you could get less conveniently and less organized for free online if you chose to). And it's ironic that I read Malcolm's review for free. And ironic that you can read Chris's arguments the most cogently by paying for them.
People will pay for content if it is so unique they can't get it anywhere else, so fast they benefit from getting it before anyone else, or so related to their tribe that paying for it brings them closer to other people. We'll always be willing to pay for souvenirs of news, as well, things to go on a shelf or badges of honor to share.
"by refusing to build new digital assets that matter, traditional publishers are forfeiting their future. ... People will pay for content if it is so unique they can't get it anywhere else, so fast they benefit from getting it before anyone else, or so related to their tribe that paying for it brings them closer to other people."Freemium and Freeconomics
This week we saw the release of Chris Anderson's book Free and reviews from the New Yorker (Malcolm Gladwell) and the Financial Times. I'd like to talk a bit about the firestorm that freeconomics (fed by Chris' book) has unleashed...
"Earlier this week, we spoke to several sources who each have some insight into Facebook's financials (none of them know precisely). Taking the sources' input together, we'd estimate the company's expected 2009 revenue this way: * $125 million from brand ads * $150 million from Facebook's ad deal with Microsoft * $75 million from virtual goods * $200 million from self-service ads. "You Think 'Free' is About the Price? It's not.
You Think ‘Free’ is Only About the Price? It’s Not.
Time and time again I see the discussion about free content, free services, free products, and how they're going to liberate/destroy/change the current economy,Content is a Service Business - Tools of Change for Publishing
- Tools of Change for Publishing
"Whether they realize it or not, media companies are in the service business, not the content business. Look at iTunes: if people paid for content, then it would follow that better content would cost more money. But every song costs the same. Why would people pay the same price for goods of (often vastly) different quality? Because they're not paying for the goods they're paying Apple for the service of providing a selection of convenient options easy to pay for and easy to download."When you succeed with Free, you are going to die by Free « blog maverick
via dstCarsonified » How to Choose a Business Model
In this 30 minute video from the FOWA Tour, you’ll learn the key points you need to consider when deciding on the business model for your product or service.
Carsonified on thinking about models for your online business - when to, and when not to, consider freemium models and building up a viable paying customer base.
How to Choose a Business ModelCoding Horror: Software Pricing: Are We Doing It Wrong?
"...the idea that software should be priced low enough to pass the average user's "why not" threshold is a powerful one."
codinghorror application software pricing price discount appstore apple iphone coding horror
What I think isn't well understood here is that low prices can be a force multiplier all out of proportion to the absolute reduction in price. Valve software has been aggressively experimenting in this area; consider the example of the game Left 4 Dead: Valve co-founder Gabe Newell announced during a DICE keynote today that last weekend's half-price sale of Left 4 Dead resulted in a 3000% increase in sales of the game, posting overall sales (in dollar amount) that beat the title's original launch performance. It's sobering to think that cutting the price in half, months later, made more money for Valve in total than launching the game at its original $49.95 price point. (And, incidentally, that's the price I paid for it. No worries, I got my fifty bucks worth of gameplay out of this excellent game months ago.) The experiments didn't end there. Observe the utterly non-linear scale at work as the price of software is experimentally reduced even further on their Steam network: The mass
One of the side effects of using the iPhone App store so much is that it's started to fundamentally alter my perception of software pricing. So many excellent iPhone applications are either free, or no more than a few bucks at most. That's below the threshold of impulse purchase and squarely in no-brainer territory for anything decent that I happen to be interested in.The bar for success in our industry is too low - (37signals)
"This pattern — “success” based on forecasted future success instead of current success — shows up all over the tech-business press. Instead of metrics like “they make more money than they spend” we see stuff like “user count growth” and “followers” and “impressions” and “friends” and “visits” qualify success. Whenever you see someone piling big numbers into made up metrics, it’s a diversion."
This pattern — “success” based on forecasted future success instead of current success — shows up all over the tech-business press. Instead of metrics like “they make more money than they spend” we see stuff like “user count growth” and “followers” and “impressions” and “friends” and “visits” qualify success. Whenever you see someone piling big numbers into made up metrics, it’s a diversion.
This pattern — “success” based on forecasted future success instead of current success — shows up all over the tech-business press. Instead of metrics like “they make more money than they spend” we see stuff like “user count growth” and “followers” and “impressions” and “friends” and “visits” qualify success.Chris and Malcolm are both wrong | Union Square Ventures: A New York Venture Capital Fund Focused on Early Stage & Startup Investing
Since Craigslist collapsed a multibillion dollar classified advertising business into a fabulously profitable $100,000,000 business, perhaps we should be talking about the potential deflationary impact of more "zero billion dollar" businesses.
. As the radical efficiencies of the web seep into more sectors of the economy, and participants in social networks exchange attention instead of dollars, will governments at all levels need to make do with less tax revenue? That's a scary thought in an era of high deficits unless traditional governments can learn from the efficent governance systems of social networks and provide more for less.
In a world where facts are readily available, from multiple sources, basic information will be commoditized. But the explosion of sources will create a real burden for the consumers of information. Raw information will become not just a commodity, it will be a nuisance. In that world, consumers will value scarce, relevant insight over abundant facts.
In a world where facts are readily available, from multiple sources, basic information will be commoditized. But the explosion of sources will create a real burden for the consumers of information. Raw information will become not just a commodity, it will be a nuisance. In that world, consumers will value scarce, relevant insight over abundant facts. Computer scientists have been working for years on algorithmic ways of mining text for insight with only modest success. It turns out that people still out perform computers at this task. Web services like Google, LastFM, and Facebook, succeed because they do a good job of harnessing the explicit or implicit input of users to sift through an overwhelming supply of information to deliver relevant insight. Google uses in-bound links to filter search results. LastFM uses other people with similar tastes to recommend music. Facebook filters information by the strength of relationships.
tHow Freemium Can Work for Your Startup
I know Leo and the TWiG gang talked about this a bit on Saturday, but this would be a great story for TWiT today. Plus there's a lot of good info in this story, it's very well written.
I then asked my friend, “so why would they ever use the Google (non open source) license version.” Here was the big punch line – because Google will give you ad splits on search if you use that version! That’s right; Google will pay you to use their mobile OS. I like to call this the “less than free” business model. This is a remarkable card to play. Because of its dominance in search, Google has ad rates that blow away the competition. To compete at an equally “less than free” price point, Symbian or windows mobile would need to subsidize. Double ouch!!
less than free is better than free... whee....Running a freemium web app? Here's a big reason we're growing.
Annotated link http://www.diigo.com/bookmark/http%3A%2F%2Fblog.scoutapp.com%2Farticles%2F2009%2F11%2F04%2Frunning-a-freemium-web-app-heres-a-big-reason-were-growingLessons Learned: Three freemium strategies
ed, just that it's something that you should be willing to experiment with on an ongoing basis with the knowledge that it's going to take a long time to get it exactly right.
Interesting blog abour freemium strategiesIs Free The Future Of Enterprise Software? Yes And No.
Free is not a business model, it’s a marketing and distribution tactic. Don’t forget this, and don’t get distracted into thinking otherwise. Free is not an excuse to make a lesser product, in fact it forces you to make a better product or no one will ever pay. Free will expand your market size and scope instantlyMonetize The Audience, Not The Content
Freemium model.Subscriptions are the New BLACK. (+ why Facebook, Google, & Apple will own your wallet by 2015) - Master of 500 Hats
An utterly enthralling rant about the economics of the web, written 40,000 feet up in the air. "Newsflash folks: The Internet does NOT want to be FREE... It wants to GET PAID on Fucking Friday, just like everybody else on the damn planet."
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ASSERTION #2: The default startup business model for 2010 & beyond will be subscriptions and transactions (e-commerce, digital goods). Newsflash folks: The Internet does NOT want to be FREE... It wants to GET PAID on Fucking Friday, just like everybody else on the damn planet.
(+ why Facebook, Google, & Apple will own your wallet by 2015)Case Studies in Freemium: Pandora, Dropbox, Evernote, Automattic and MailChimp
Case Studies in Freemium: Pandora, Dropbox, Evernote, Automattic and MailChimp
great read RT @nickdemey @lizgannes - Case Studies in Freemium: Pandora, Dropbox, Evernote, Automattic and MailChimp - http://bit.ly/9w7ofE3 key ideas from a recent Freemium dinner conversation | Futuristic Play by @Andrew_Chen
good bullet points on the common challenges facing the freemium model.
RT @igrigorik great read on freemium models / patterns for startups: http://tinyurl.com/d5a5xs [from http://twitter.com/nealrichter/statuses/1575106507]Chris Anderson’s Counterintuitive Rules For Charging For Media Online
The best model is a mix of free and paid You can’t charge for an exclusive that will be repeated elsewhere, Don’t charge for the most popular content on your site, Content behind a pay wall should appeal to niches, the narrower the niche the better
Wofür kann man Geld nehmen und wofür nicht?
# The best model is a mix of free and paid # You can’t charge for an exclusive that will be repeated elsewhere, # Don’t charge for the most popular content on your site, # Content behind a pay wall should appeal to niches, the narrower the niche the better
Let the popular content be paid for by advertising, and the niche, exclusive content can be sold to fewer people at a higher price.
He articulated something that is now increasingly becoming obvious: As products go digital, their marginal cost goes to zero.5 Tips To Transition From A Free To A Paid Service
Long post, but good read (headline says it all).