October 2008
14 posts
Comparing New Economy business models
Adam Their compares Nick Carr’s “typology of network stragegies” with my “four kinds of free”. And rightly notes that both of our work is partly based on lots of earlier work from people such as Hal Varain and Stan Liebowitz. I’d add Kevin Kelly to that.
Freemium business models on the rise
Silicon Alley Insider has a good roundup of companies introducing creative premium upgrades for their free services. Not sure why they think this contradicts the Free trend, unless they don’t realize that such Freemium business models are part of it. Free versions are the best marketing for paid versions, as these companies are demonstrating.
Why the "free rider problem" isn't a problem
Tim Lee explains why the classic “free rider problem” in communities (if most people don’t pitch in, those that do get miffed) isn’t a problem online. Those free riders are called the audience!
What happens to the Free Newspaper model now?
The past decade has seen a boom of free newspapers, often to reach younger readers who weren’t reading newspapers and expect content to be free. These papers are all paid for by advertising, but with newspaper advertising falling by double-digits, that model is struggling. In South Carolina, Bluffton Today will now cost a quarter. “We need our readers’ help more than ever during these...
Linux ecosystem worth $25 billion
A new study estimates that the for-profit businesses built around the free open-source Linux operating system at $25 billion in annual revenues. That includes the IBM Linux business, RedHat etc. When the study is actually available, I’d like to see if it also calculates the cost savings of Linux users, which would hint at the other side of this balance sheet: the lost sales of the paid...
The Long Tail of wine
From Vinfolio: “70% of the wine we sell (by value) is sourced from private collections because that’s where most of it is — not in the trade channels. We are, in effect, systematically creating a new supply channel for fine wine by aggregating the `long tail’ of supply.”
How to build a freemium business
If you’re intersted in the “freemium” model, you’ll want to read this excellent post by Mukund Mohan at BuzzGain on the five metrics to follow to get the free/paid balance right. BTW, his conversion ratio is 2.7%, and a good rule of thumb for such b2b services is 5%, so the question is he can improve his without breaking the model. If the conversion rate is too high you may...
Another take on what recesssions mean for free
O’Rielly’s Nat Torkington: “This recession will be great for free and open source because of the shortage of cash. Last recession saw the mainstream legitimisation of open source operating systems (youngsters, take note: there was a time when it wasn’t automatically okay for an IT department to use Linux) because it was clear and away the most cost-effective choice. The...
Neil Gaiman is giving away his new book
“The Graveyard” is a reworking of Rudyard Kipling’s The Jungle Book, only instead of animals, the protagonist’s mentors are mostly dead people. Gaiman is giving it away, a chapter at a time. [UPDATE: The book is now the #1 New York Times bestseller in children’s fiction. Note he’s also reading the book aloud and giving it away, chapter by chapter, as a free...
What does the downturn mean for free?
To those who suggest that the downturn means that the free-to-consumers model of web software will go away in favor of good old selling to businesses, Fred Wilson begs to differ. “If your free version is popular with a lot of users, your customer base is the target for the upsell and you might be able to live without an expensive sales force initially. And, of course, keep your costs really...
A classic case study of Freemium
Gnip, a service that does social network data portability, has annouced how it plans to make money. TechCrunch explains: “Gnip’s business model is freemium - lots of data for free and commercial data consumers pay when they go over certain thresholds (non commercial use is free). The model is based on the number of users and the number of filters tracked. Basically, any time a service is...
Finally, a proper research paper on the Attention...
Bernardo Huberman at HP Labs does an analysis of how the sucess of YouTube videos in gettting attention encourages their creators to make more videos. Attention is incentive enough—no money required.
A better design for the taxonomy of free
This blogger rose to my challlenge to design my free taxonomy diagram with actual people. The people are fine, but I fear that the taxonomy has got a bit too complicated in the process. I’ve encouraged him to do one more pass.
More variations on the media business model
Ways to make money from free content that are smarter than thowing up some Adsense code: 1) give away content, sell merchandise, 2) get a single sponsor, 3) limited free, then sell, 4) name your price.
