Right now on the internet there's a lot of discussion on the book "Free", a book exploring, well, the impact of freeness (and the internet's way of delivering it) on business models. I've not read it yet, I probably should, if only to know where I'm going to fall on what appears to be a lot of inevitable arguments.
The discussions have made me speculate on the future of media – because media is a repository of geeky jobs. Comics, books, reviews, games, etc. What does free mean to us in such industries – or those of us who want to go into them. I will attempt to keep my thoughts somewhat above the level of "ramble".
So imagine you're going online to provide some media – a game, a comic, an online novel delivered in snippets, etc. You're going to do free because Free gets attention and there's a lot of competition. Here's what I think it means for you, the professional geek
FREE ISN'T FREE:
One may provide something for free, but it costs to make, produce, and distrbute something. The costs can be lowered, but rare indeed is free TRULY free. This means that though something may be NEARLY free it is not TOTALLY free, and if you give it away FOR FREE, its still costing you. That's nothing much when it's a small project, but if you look at many free sites right now they're losing money (YouTube anyone?).
Creating something involves the transformation of resources – and thus time, energy, and other resources. Even writing is transforming your time, energy, and knowledge into content. Creating costs somebody something.
Therefore the free model not only doesn't mean break even (as some seem to treat it), it means expense. If the product produced does not directly bring income, you have to do it somehow. Much as people have content and make money via ads, merchandise, premiums, etc. future businesses will need to find ways to monetize.
* Freeness may be a good marketing tool, and expected.
* Freeness won't pay the bills.
* You need to find ways to monetize your work.
FREE CONTENT MEANS EXPLORING OPTIONS – AND EVERYONE IS:
OK, so you need to make money and are providing something for free because A) everyone else does, and B) you can due to low costs (for now). How do you make money?
That's the huge question no one has an exact answer to. Webcomics like Penny Arcade and Girl Genius have advertising, TPBs, etc. Some social media sites have cash purchases to detail avatars. Game companies have extra stuff, unlockables, and character classes you can pay for. Sometimes this "free" verges into "free stuff and more stuff you pay for."
If you're in an online media business, if you're leveraging free, the answer to monetizing is – no one knows.
Right now people are exploring all sorts of income models. Some are working, some aren't. No one has the best answer yet. I do have a few observations:
* Advertising, the old standby, seems to still work, if not perfectly. The less intruisive and the more useful and relevant, the better.
* "Freemium", free-with-paid-content really is just a pay model with a demo section. Whatever we call it, it's not free per se.
* There's a patronage model – which is really just donations, support, or "if I get enough money I can get writing." This is erratic, but there's been talk over the last decade of somehow making a more organized patronage model.
* Peripheral or associated services – the free content is part of a larger body of services. This verges on the "Freemium" and similar models however. The free content often seems to suffer.
* There are many income models people are experimenting with.
* "Freemium" and such games aren't free, the free is just an attractor.
* There seems to be no perfect formula.
* If you find a perfect formula, tell me.
MAKING MONEY IS ABOUT PROVIDING PEOPLE WITH SOMETHING THEY'LL PAY FOR:
The above sentance is ridiculously simple, but it's true. Your free stuff is giving people something they DON'T have to pay for, so to make money you have to give someone something they want and WILL pay for.
(and yes one may argue some models don't follow this, but to put it gently such models are not beloved).
The problem with Free is that, well you make no money off of what you give away for free, so you need some kind of income model. This requires you to give SOMEONE somewhere something they want so they give you money, related to whatever you're providing for Free. Your business model is going to be different if you leverage freeness because your core product isn't making you anything per se – it's peripheral activities.
So in an odd way, providing something for free pays you off in attention, dedication, etc. – anything but money. You'll need to convert this into money somehow. Selling ads turns that attention into ad sales – and thus into money. Selling peripheral merchandise turns dedication into money.
Thus your issue with free is converting your "non-monetary benefits" from the free product into monetary benefits by either redirecting said benefits, or using those benefits to promote side endeavors.
Obviously there's danger that what is Free could easily become secondary to all other activities.
One model I see a big future in is a mixed-model like one sees at LinkedIn.com, Crunchyroll.com, etc. Free is one aspect of it – a teaser, a loyalty builder, a way to sell adds. There are then various tiered levels of deluxe service (or elimination of ads).
* There are more ways to be paid than in money.
* Converting these "other ways" into money is core to making money.
* There is a psychological danger that the core effort, that which is free, may be minimized.
* Mixed models show some promise.
FREE MEANS MORE THINGS FIGHTING FOR PEOPLE'S ATTENTION:
Free is an awesome marketing tool. We love free. *I* love free. I'm a dedicated cheapskate.
The problem is that when so much is free, it divides people's attention. Just take a look at the free services, games, social media sites, etc. If you launch a new game, webcomic, website, etc. you're up against a WHOLE lot of free.
This is further exacerbated by price drops in technology and other services (some of which are, yes . . . free). People can do more and more faster and faster online. More and more infrastructure of the physical and information variety has been constructed for people to leverage. That means more participants – and if you work in this "middle" some career opportunities.
Now many initiatives as we know, fail. Around 70% of blogs (often started free) fail within the first year. Free does not mean success, because even if you can deliver something free, at minimal cost to yourself, it may not be what people want. YOu do not distinguish yourself by starting something – you distinguish yourself by surviving.
This also means that people, with much content, want ways to find the content they want. Search engines, networking, ranking, etc. We have abundance of online content, services, etc., and no way to determine how to spend our specific time. It is important to make sure any business you launch stands out, and is accessible – and of course if you get into a business that involves ranking, etc. (yelp.com, linkedin.com) you're in an area providing a needed service.
I see two basic responses people have to the large selection of free and low-cost services, made easier by other free and low-cost services. There will be dilettantes who surf many things, and loyalists who stick with what they want/know/like. Retaining loyalists and converting dilettantes will be important in any business you do.
* Free means more competition.
* Free comes from the building up of infrastructure that makes things cheaper – which may be a viable place for people's career ambitions.
* Free and low-cost means high attrition rates as more people try business and other endeavors, but do not succeed.
* The value of being able to find quality content and services people want is paramount.
* You must focus on retaining loyalists and converting dilettantes to loyalists.
OK, quite a long analysis. I think free means there will be competition and a larger focus on converting non-cash resources (attention, loyalty, di
lettantes) into cash, and looking into mixed models of "free." Free is here to stay, but how we deal with it is evolving.
– Steven Savage