Seth Godin, Malcolm Gladwell, and Chris Anderson have been talking quite a bit about “free” and what it means. Chris contends that anything that is strictly made of “ideas” will push toward a lower cost until it is free. This may be because competitors try to outdo one another through price wars until things become free, or people will choose not to pay for ideas at all (e.g. getting your news via free websites rather than paid newspapers).
Malcolm suggests that this can’t always be the case, especially for large-scale infrastructure costs like the generation and distribution of electricity and clean water. Seth explains that we are already there, and unless companies (such as newspapers) learn to handle this new shift in their business rather than creating by-the-book rewrites of news that any of us can access.
The Free Model
Rather than saying that a specific rule can be deemed right or wrong, which is really what Malcolm’s article concludes, I want to list a few examples of things that are free:
- Google, Microsoft Bing, Microsoft Live – free search, free email, free websites, free maps, free documents and spreadsheets; paid contextual ads by vendors that want to find people looking for general or specific things. They get me to other peoples content, including paid content and I’m OK with that (so far)
- Community newspapers – paid, but often wrapped into homeowner association fees, so they appear “free” to recipients. Readers are treated to hyper-local content that is relevant to where they live and play
- Seth Godin, et. al. – free blog, free ebook, free samples; builds trust and provides free, easily located content via search engines; sells books and speaking engagements. I’ve purchased his books, how about you?
The Pay Model
Now, here are some examples of things that aren’t free but seem to be performing well:
- iTunes and iPhone Apps – (relatively) expensive gadgets that need stuff to make them useful. People are willing to pay small amounts in large quantities. This isn’t easy unless you are well known and can do things at a large scale
- Premium Cable Shows – TVs are now getting nicer and we need content. Most content is free but not as great. Cable TV is generating paid content that people like, through better story writers and avoiding typical plots and templates
- Software as a Service (SaaS) – web applications often offer a free level to reduce risk and entice people to “try before they buy”, with paid subscriptions offering more features and fewer limitations
Putting It All Together
What does this all mean? First, it doesn’t mean that you can build a business with nothing but free (YouTube is an example of this). However, it does mean that your idea needs to consider the free side. This means you need to ask some hard questions:
- How would my business be different if what I produce were free?
- How could my business help others and build trust through free offerings or knowledge?
- How can I build free and paid offerings into my business model?
Consider these questions. Determine how it can make your idea launch better, faster, and with more impact. Figure out how to set your idea free.