Sunday, March 2, 2008

Great Explanation about Business of Free

A must-read Wired magazine article for all association executives: "Free - Why $0 is the Future of Business". Written by Wired magazine editor in chief Chris Anderson. It's long, but stick with it because it explains 6 broad business models continuing to emerge around the concept and business of free:

1. "Freemium" - free basic service, then pay for additional features (like Flickr);
2. Advertising - free content, others pay premium for getting to them (like lead generation);
3. Cross-subsidies - free products subsidized by other costs (like free phone with a calling plan);
4. Zero marginal costs - freely distributed content to grow interest in paid services (like free music creating interest in paid concerts);
5. Free labor exchange - allowing free participation creates results of value to others (like rating service results);
6. Gift economy - free because content or other value generated by altruism (like Wikipedia)

Also has notable quotes to put into your organizational thinking, including: "The winners made their stuff free first.";"Free shifts the economy from a focus on only that which can be quantified in dollars and cents to a more realistic accounting of all the things we truly value today."; and "Because free is what you want - and free, increasingly, is what you're going to get."

A common mantra in associations is that members want it now and want it free ... so more ways to get to free.

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