There are whole groups of people who have embraced the idea of ‘free’…none more so than personal finance bloggers and their followers.
I subscribe to three blogs (Money Saving Mom, Northern Cheapskate, and Bargain Briana) if only for their tips on getting free stuff (iced mochas at McDonalds and free Redbox rental on Mondays, for examples!).
And anytime I put the word ‘free’ in a blog post, hits go way up. And I’m pretty sure that other bloggers have the same experience.
In the Boston Globe (June 28, 2009) was an interesting article called ‘The Future Of Free’. Chris Anderson, editor-in-chief of Wired magazine, recently wrote a book called “Free: The Future of a Radical Price”. The premise:
“For many people, music is now free, along with news, movies, video games, and the software to help with everyday tasks. In ways it was not before, it’s free today to look for jobs, apartments, friends, roommates, and even romance. For the time being at least, the forces of free are upsetting not only traditional business models, but long-held assumptions about what we have to pay for, and when and how.”
Some people think this is hooey:
“Overall I would say he’s pointing to a trend that is real, though also a trend that is by no means new,” says Kartik Hosanagar, an associate professor at the University of Pennsylvania’s Wharton School … “This notion that the future is free for just about everything around us, or even the majority of things around us, is just an oversimplification.”
But what’s interesting is the success some have had with this business model:
“… a young musician named Derek Webb who gave away his album for free to downloaders as long as they left their e-mail addresses. Webb used the 80,000 e-mail addresses to build a mailing list, ensuring that his concerts are sold out and selling far more merchandise than he otherwise would have.”
And some websites offer ‘basic’ services for free but charge a higher amount for premium services (a ‘freemium’, if I am using the term correctly).
It’s also interesting that recently I’ve noticed that some companies have had to change their usual ‘freeness’. Here’s part of an email I got as a Pandora subscriber from the president of the company:
“..While we did the best we could to lower the rates, we are going to have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the web. Because we have to pay royalty fees per song and per listener, it makes very heavy listeners hard to support on advertising alone…We hate the idea of capping anyone’s usage, so we’ve been working to devise an alternative for listeners like you. We’ve come up with two solutions and we hope that one of them will work for you:
Your first option is to continue listening just as you have been and, if and when you reach the 40 hour limit in a given month, to pay just $0.99 for unlimited listening for the rest of that month…Your second option is to upgrade to our premium version called Pandora One…”
‘Freemium’ seems to be the waty to make some money while offering some free online content. Making money off free? Personally I am a little skeptical…
What do you think of the free business model?
“Free biz model A few thoughts and tangents on ‘free’ businesses I’d agree that ‘free’ as a ‘business’ is nothing new, but not in the same way that the book/wired article talked about. I put ‘business’ in quotes because there’s the whole world of volunteer & other ‘not for profit’ work where lots gets done without a traditional monetary gain.For example, I help organize a folky concert series up here as the link Downeast Concert Collective. We give 10% of the door sales to the venue as rent and the other 90% to the performer.While we’re not giving the concerts away for ‘free’, we normally charge $10 – $15 per person, we’re doing a whole lotta work for absolutely no personal monetary profit, in fact we pay to attend the shows too. Other local concert organizers whom I’ve tried to coordinate with have literally asked me ‘If you’re not making money, why are you doing this?’. It’s a ‘business’ model that just baffles them… why would you do something without making money? Not really the traditional US capitalism model we’ve all been trained to follow since an early age.But in this case, we’re doing it for the love of that type of music.. if we didn’t organize this series, many of these artists would never make it up here, certainly not in the immediate Ellsworth area.Along those lines, there’s of course another ‘strange’ business model in the Downeast area, WERU FM link. Like all community radio stations, they give it all away for free and ask people to donate when they need funds. WERU is pretty unique, even in the community radio circles in that it doesn’t have a ‘sugar daddy’ like a college or other organization to back it up and cover some portion of expenses. WERU also lets just about anyone have a show on whatever topic they want provided they go through the training and can prove they will do a professional job.I also do a ridiculous amount of web work for non-profits and other friends. I’m not particularly good at ‘monetizing’ this work, cause I’m not doing it for any reason other than helping them out. If they want to put a ‘this site design/hosted by Svaha LLC’ that’s great but I’m not putting that on their sites myself, since I would feel greedy and selfish if I did that. Why d it? Someone asked me this question regarding the amount of work I’ve done over the past 2 years in trying to help revive my currently-still-deceased college (link) and the answer I came up with applies more globally ‘To earn the respect of those I respect’. I also have a deeply engrained illogical but still present belief in some variation of ‘karma’.. surely if I help those that need help nothing bad can come of this… right? (crossing fingers)Anyways.. this went way off on some strange variation from the ‘free business model’ they talked about here but I guess I’ll post it anyways. “
“free-ish I can’t speak on economics with any authority. I will say that giving away content for free online, and attempting to charge for premium content, has not helped the newspaper industry à quite the opposite. The A.V. Club recently panned Anderson’s “”””Free,”””” giving it a rare D+. It might be worth checking out the review.Finally, if the word “”””freemium”””” becomes part of our lexicon, I will formally renounce society and live my dream of being adopted by a tribe of Antarctic penguins. where I shall warm their eggs with my body in exchange for regurgitated fish. I hate that word that much.”
“link By the way, the link to the AV Club’s review is http://www.avclub.com/articles/free,30142/“
“ It’s going to be interesting to see where this goes because people need money. Sure delivering free content or products can lead to other revenue models, but business needs to make money, and people should expect to pay for services. I am going to try to read his book at some point.”
“Newspapers I think the issue of the current state of newspapers is more complicated than blaming them for not charging for all their content. Some sites tried that initially and were quickly left out of major search engines etc. basically became irrelevent in the internet. Other factors like the fall of classified ads to craigslist &/or ebay (or heck, lets blame freecycle.org too while we’re at it) come into play. You could also rewind more than 15 years back and use the ‘TV is killing newspapers’ argument, which actually may be more of a factor now that another generation of those raised on video as a primary entertainment/news medium has been added. I’m sure there are books on ‘the rise and fall of the printed newspaper’ that cover this in depth. Personally, I don’t care about the medium but the fall of having a way to have paid professional journalists with the ability to spread the truth through an easily accessible mass medium is what’s really the issue here. While blogs are interesting and can share some facts, they are not a substitute for ‘real’ reporting that you would find in newspapers.I think I’ve sufficiently drifted away from the ‘free as a business model’ topic again so I’ll get off my soapbox now. -Matt”