How the ‘Free Economy’ is taking over the world
Business models are a dime a dozen. Some work in one situation but completely fail in another. Markets are not all the same. But then again, that’s what makes business fun and unpredictable.
Find the right model for the right market and you have a winning business.
Although not a business model, in the strictest sense, there’s one concept that has been the foundation for many successful businesses in recent years: FREE. Chris Anderson, Editor-in-Chief of Wired Magazine, recently released Free: The Future of A Radical Price. In his book, Anderson documents how ‘Free’ is taking over the world.
With apologies to Anderson, allow me to woefully summarize his thesis…
Step #1: Give away something of value. Not just something sort-of valuable, but a product or service that genuinely helps a specific market.
Example: Google gives away a very valuable search engine to the internet searching public.
Step #2: The value of your gift attracts the attention of your market. This in-turn, results in more attention directed back to your free product.
Example: Google’s proprietary search algorithm attracted the geeks first, who in turn told everyone else. Now Google owns 60-70% of the search market.
Step #3: Eventually monetize that attention you gained from your free product or service.
Example: Google’s primary revenue source is their contextual advertising in both search results and their content network. Google’s advertising was more of an after-thought rather than the primary motivation behind their search engine.
‘Free’ is not a new concept. But with the explosion of websites and ever-increasing bandwidth of the internet, ‘Free’ is becoming the foundation for most online and many offline businesses.
If you’re a business owner, you must understand ‘Free’. The best way to do it is to read the book. It’s a little academic, but well-worth the slog. The electronic version is free, of course. Or listen to it…for free. You can find both the Ebook and MP3 versions at the Long Tail blog.