The FREE business model, as Chris Anderson explains

Chris Anderson’s discussion of FREE online business models raise many of the same questions that my posts about advertising-driven and subscription-driven media models did after the Future of Media Summit 2008. Read people’s comments on his original post.

This is a key debate taking place worldwide as traditional/print/atom/physical (call it what you like) businesses look to translate their revenue generation model online, as they acknowledge the growing impact of the digital space.

I had a meeting today with a travel agent who has a website. Their site, however, is nothing more than manually controlled brochure ware for events and prices. They didn’t recognise the significance of search engine traffic, the potential for ongoing interaction with clients, or the ability to offer FREE advice and information to new visitors. I could go on. You don’t think about a travel agent being involved in the FREE economy, however, they have built up so much specialised information which they happily pass on to people over the phone, or across the desk on a regular basis that they ARE giving away valuable ‘intellectual property’ without having it clearly packaged-up and branded. This content can easily be ‘wrapped and branded’ as important, FREE product that will assist travelers, particularly in highly-targeted markets. Will this sell travel services? If the information is valuable and engaging, it’s a reflection of the type of service you will provide. And people want to buy valuable and engaging services and products.

Here’s what Chris Anderson has to say about FREE:-

_________________________________________

FREE: the cocktail party version

When you’re writing a book you need to have your elevator pitch down or “What’s the book about?” will become the most dreaded four words you can hear (followed closely by “how’s it going?”).

Obviously the one-sentence version of the answer should be something close to the book’s subtitle. But I haven’t nailed that one down yet, so these days I just say “The economics of zero dollars and zero cents” and hope for the best. Some people glaze over and move on at that point, but for those who stop, intrigued, and ask me to explain, here’s what I say:

We all know free–it’s a trick that marketers use. But free is changing. When you think about it, there are two economies, one of atoms and one of bits. In the atoms economy, which is to say most of the stuff around us, things tend to get more expensive over time. But in the bits economy, which is the online world, things get cheaper. The atoms economy is inflationary, while the bits economy is deflationary.

The 20th Century was primarily an atoms economy. The 21st Century will be equally a bits economy. This book is about the differences between 20th Century free and 21st Century free–free moving from a marketing trick to a new economic model.

Anything free in the atoms economy must be paid for by something else, which is why so much traditional free feels like bait and switch–it’s you paying, one way or another. But free in the bits economy can be really free, with money often taken out of the equation altogether. People are rightly suspicious of free in the atoms economy, and rightly trusting of free in the bits economy. Intuitively, they understand the difference between the two, and why free works so well online.

– For more see: The Long Tail – Wired Blogs.


Bookmark and Share

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: