Wednesday, April 8, 2009
FREE, the new business model!
From FREE razors, printer, to newspaper and even iPhone app classes
Since this blog is written both for my own learning as well as for those who are new to mobile content business and mobile marketing, it is helpful to repeat using some sources of information in different context as we explore different issues and subjects of learning.
The Generation Mobile Community grows up with FREE content widely available at their finger tips. In the Feb 25 issue of WIRED magazine, Chris Anderson discusses FREE in today's business model. In fact, offering FREE product/content is not an invention of the internet. The razor blade industry has been offering FREE razors since many decades ago and making billions in razor blades. And I would add that the printer industry has been selling printers as cheap if not cheaper than buying the replacement ink cartridges. FREE content offering is most intensified in the media industry. In 2007, the New York Times went free and is paid off as traffic increases substantially. According to CNET news, on March 10, the British newspaper, the Guardian, announced it's launching an open platform designed to offer third parties free access to its content and data, in exchange for carrying the publication's advertising. Today, I stopped by my local 3 mobile operator and check on my husband's last month's billing details and realized that he had spent HKD 98 for the month on 3G data mostly for reading NYTimes on the Nokia N82 while traveling on MTR. The FREE content economy has shifted the revenue model and the more FREE content become available to the mass public, the greater the growth of mobile data and mobile advertising revenue to come.
FREE iPhone application online course from Stanford
This month, Stanford announces a FREE iPhone application development online course for the public. For those who wish to learn to develop iPhone apps, you can now do it from the comfort of your own home or even on the road as long as you have a connected device with WiFi or mobile data connectivity.
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Mike Masnick's posts on the TechDirt blog go into great detail about the concept of "free".
ReplyDeleteI forgot the link: http://techdirt.com/
ReplyDeleteThank you for the lead to Mike's articles in Techdirt. It's fascinating reading his articles on music and news's changing economics under the digital, FREE content era.
ReplyDeleteOne quite important thing to remember in all this is that there is no such thing as a free lunch.
ReplyDeleteConsidering all the "free" things in the Internet, it's worth pondering the bigger issues behind this recent quote from the Economist:
Perhaps most dangerously, Web 2.0 still had only one business model, advertising, and the Valley was refusing to admit that only one company (Google) with only one of its products (search advertising) had proved that the model really worked. The older internet firms, Yahoo! and AOL, were doing their best to grab a piece of the action. But the “next big things” were selling negligible advertising, often on one another’s sites. Not one of them has become an advertising success in its own right.
Without even exaggerating too much, the only success story in the "free" Internet services is Google's search business. Most of the others are losing money - some at astonishing rates. For example, Google's YouTube is losing it at an estimated rate of $500M USD/year.
Clearly the situation is far from sustainable as one cannot expect other services or VCs to indefinitely subsidize all the free Internet services.
Sami, we are certainly traveling in the time of shifting economics of the Information Economy. Mike Masnick of TechDirt has been writing about this subject almost since the inception of TechDirt. I find Masnick's use of infinite goods and scarce goods to discuss the information economics eco system provide a framework to further explore the if and what flavors of FREE content business model are sustainable. As corporations start embracing more blogging networks, mobile social networks and micro sites in their branding and marketing strategies, we need to look at the broader eco system beyond the advertising revenue and content itself for what's sustainable. More on next post.
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