Perspectives & Strategy

Is there something missing in the on-line concept of free? There is a view that everything on-line should be free. The New York Times introduced their on-line news totally free, yet The Times (from London) actually charges an on-line subscription and there is additional benefit provided to the reader. Which is the right model? Perhaps neither.

Chris Anderson has recently published a book called “Free: The Future of a Radical Price”, which you can download a full unabridged audio copy, ironically free, here. which I am currently listening to as a part of my new business development. My challenge is can we really offer free services and make money out of it? I think the concept has some merit but do have to question where money can be made.

I have been running this site for some time and I know that it has raised my profile within my network and community. Yet is has not assisted my bank balance.

One of the concepts that Chris Anderson discusses is that the cost of on-line storage is reducing to the extent that it is almost free. Also the cost of publishing on-line is also so low that the free model makes sense. Yet there is one thing that can be forgotten in this equation, the value of the time of the author. I have worked for a chunk of my life in managing consulting practices and the cost of the advice given in these pages if used as billable consulting hours would have been hundreds of thousands of dollars, yet it is all here on these pages for FREE!

Please note that this is not written in the form of a gripe, it is written in the desire to learn and understand how to make money from ‘FREE’. I am writing this as the baseline understanding (e.g. the knowledge that I have before I personally understand how to leverage the free model to make money). The one aspect of the equation that is frequently forgotten is the effort or labour of the people making the contribution, especially when the only publication route is the Internet. Even with advertising on your site the amount you can earn through pure on-line knowledge contribution is close to zero.

Is free the default mode of exchange for humans? As Chris Anderson points out that within the family ‘free’ has always been the normal mode of exchange. I guess it is one of the reasons many business start-up guides tell you not to market to family members, because of the tendency to give things away for free. Indeed the Capitalist economy dates back less than four hundred years, yet we often view it as having always been here, and ever present into the future. I am not going to enter into a discussion about the merits of the capitalist system – this is not the right forum. I do however recognise that I live in a capitalist world  and unless that changes have to live by those confines.

Making money from FREE, is an important part of that process. The web is clearly a part of our long-term future and with the low cost for creating a new site and hosting especially when viewed in terms of the thousands of people who visit your site every year.

Is one of the side affects of FREE that we as a society are now tending to sell at an undervalue? Take for example the building of web-sites. Take a short trip through the business district of any city and you can see many adverts saying we can build your web-site for $199.99 or even lower. Yet few people question what the end result is from using such a service, which is clearly attacking the credibility of hard-working web-site developers, whose professional services will run into several thousands of dollars. In this example the buyer should be aware of what they are NOT getting when they buy at an undervalue. Your $199 web site will be a nasty piece of work that will simply put your business on the web with a badly designed web-site. Do a Google search for your site and it will NEVER be found, let along rank on the first page in your specialist area. This is where the professional web-developer adds value, in search engine optimisation and providing a smart os business like site, that is simply not possible by paying $199.

Another aspect of this is the micro-payment economy, which never really took off. Most people would not pay 10 cents for an article because of the pain of making the payment. Yet this is the whole concept of adding Google Adwords to your site – and yes I have included these ads on this site in the vain hope that I will eventually get some money from Google. So please feel free to cause Google give me a micro-payment by clicking on one of these ads, even if you do not buy anything. Just make sure you come back here afterwards!

We can operate quite effectively with a number of free offerings. For example membership of existing social media sites like Facebook, LinkedIn, YouTube, Plaxo, and others can be through the 5% to 10% of members that do pay for services (e.g. ‘pro’ accounts), or the uptake of member advertising programmes, as well as the commercial advertising revenue from the site. Some of these services can provide very powerful facilities at no cost.

Should there be a nominal charge for such services e.g. $10 per year? I favour the provision of basic FREE services with the addition of cost effective enhanced services e.g. $25 or $50 per year, but with a clear and visible uplift in the available service levels. For example LinkedIn’s premium account pricing structure of $250 per year is not value for money for the majority of users and would not be the price model I would adopt if I were CEO of LinkedIn. Or does the mere fact that there is a price for the service add value to the FREE service?

Now do I understand making money from FREE? Clearly at this stage in my life I do not understand enough. and as I said at the beginning this article is the baseline in understanding the FREE model.