How the ‘Free Economy’ is taking over the world
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.