Freeconomics...

CorkFenian

Any one have decent links on this besides Wiki, looking for bad examples of this, for instance, companies who got burned by using Freeconomic model and info in general... :-)

Thanking you in advance, sorry if in wrong forum

andrew

What's freeconomics?

Time Magazine

andrew wrote: »

What's freeconomics?

I was about to ask the same thing. I imagine it's some pseudo-meme that people think when choosing a price (which can be anything from -∞ to +∞) that the best one is zero.

Anonymous1987

Freeconomics?

Thanks to the exponential doublings of Moore’s Law and its equivalents for hard drives and communications, the cost of a given unit of computation, storage or transmission is inexorably dropping towards zero....

The dominant business model on the internet today is making money by giving things away. Much of that is merely the traditional media model of using free content to build audiences and selling access to them to advertisers. But an increasing amount of it falls into the free-sample model: because it is so cheap to offer digital services online, it doesn’t matter if 99% of your customers are using the free version of your services so long as 1% are paying for the “premium version”. After all, 1% of a big number can also be a big number.


In 2008, the year of free, Yahoo! will go one better than Google and expand its free webmail to infinity. More music labels will give away music as a promotion for concerts, following Prince’s free distribution of his album in Britain’s Daily Mail in 2007 and Radiohead’s offer to let fans choose their price—free, if they want—when they download the latest album. And more newspapers will publish their content free on the internet.



All this marks a pattern. When the cost of serving a single customer is trending to zero, smart companies will charge nothing. Today, the disrupter’s motto is “Be the first to give away what others charge for”. If you listen to the technology, it makes sense.

As business models go, it doesn't sound too promising, for example have Twitter figured out how make any revenue yet? And as far as I can see free online newspapers are beginning to retreat behind paywalls such as this economist article I linked to. Maybe it should be called "almost freeconomics". On the other hand seems to work for the likes of Google.

thebman

You make your money off advertising, the only real issue is treading the line between annoying ads and in the background ads while maintaining revenue.

Also income from advertising will be volatile.

Many of these companies eventually either annoy the user base away or introduce premium services

However the model does work for some. Many forums survive on advertising only so it can be done though you probably can't become a multi-millionaire out of it.

cavedave

MArginal Revolution fairly often talks about pay what you want pricing. Also search for "in Rainbows economics"

ei.sdraob

thebman wrote: »

You make your money off advertising, the only real issue is treading the line between annoying ads and in the background ads while maintaining revenue.

Also income from advertising will be volatile.

Many of these companies eventually either annoy the user base away or introduce premium services

However the model does work for some. Many forums survive on advertising only so it can be done though you probably can't become a multi-millionaire out of it.

Google called an wants it multi-billion business back

they are a perfect example of a very successful company following the freemium model

thebman

ei.sdraob wrote: »

Google called an wants it multi-billion business back

they are a perfect example of a very successful company following the freemium model

Yes however google also have many premium services supporting the free services.

ei.sdraob

thebman wrote: »

Yes however google also have many premium services supporting the free services.

Something like 99% of googles income comes from adwords/adsense which rely on them (and partner sites like boards.ie) providing free content and tools like search around this content.