Free - as a business model

[fusilierb]

Well I apologize for the absolute S*#@t storm I created with my last post on the penalties of stealing music via Peer to Peer. That was not really my intention, but it was a very interesting read.So in the spirit of interesting, here is an article by the CEO and Co-Founder of Box.net, which I'm sure a lot of us are familiar with. It is a discussion of Free- as a business model in software.A business model in the sense of advertising and gaining traction and then thriving as an entity that provides a particular service. It is pretty interesting stuff and hints towards some parallels that I see coming in this sort of "de-consolidation of empires" that this entire internet thingy appears to be bringing down upon us.As everything sort of decentralizes and more individuals have a chance of of competing on a more level playing field, the concept of free seems to be the major hurdle everyone is facing. I thought this was a pretty interesting perspective:http://www.techcrunch.com/2009/07/12/gu ... s-and-no/B

[mazz]

I can certainly see how musicians could benefit from offering some of their music for free to drive people to their site so those people would, hopefully, buy music, swag, etc. As a marketing strategy, it seems to be a good and effective one.But it's completely different from the "music should be free" argument that spawned illegal file-sharing in the first place. The artists and record companies were not offering that music for free voluntarily, people were stealing it.Eventually someone has to pay, as the article points out: Free is not a business model, it's a marketing tactic to attract people to the product in the hopes that they will buy the "pro" model and the support services.I wish my mortgage company would offer a freebie every once in a while!! Mazz

[coachdebra]

I teach giving a free taste in my Multiple Streams of Music Income courses. It's the Baskin Robbins model - if you get a free taste and you like it, you'll buy more. There's also a human impulse to give back when you've received something of value for free.With something that is so experiential such as music, it's critical to give a taste of the experience. The things to be careful of:Don't give too much for free.Always require that they give you their contact info in order to receive the free taste. Otherwise, they'll take the free taste and they're lost to you for the future.Make the next step of purchasing something from you easy, obvious and painless.

[fusilierb]

Totally agree Mazz. It was just kind of interesting to me how for spread this Free thing and the expectation of Free is becoming. I use so many free services everyday, that I've become used to it. I read my news papers for free, stream music, use free email accounts, free graphics programs, free TV, free movies, free online storage and on and on. It's crazy really. And yes, eventually someone has to pay. It's so out of control these days. And I'm guilty as anyone for dropping services that start out free and then, come out of beta and want a monthly fee. Jott.com was a great service that I loved until they started to try to charge. Evernote.com is becoming the same way fro me, although I could see myself coughing up the dough to stay with them.I just thought this article was an interesting perspective on the "free madness" that seems to have become the internet's motto, from media, to services to software. Seems like everyone still thinks that if you have enough traffic, you can make enough off of advertising alone, which is how a lot of this started and seems to be going. PS. Microsoft is about to release a free, online version off Office. Apparently Google app's and their threatened new Chrome OS are forcing them to rethink their strategies. Again, free is dragging the old business models into the mud. It's just nutty.B

[mazz]

The old business models may need to change but the bottom line is still the bottom line. Who's going to foot the bill? The money has to come from somewhere! The .dot com boom and bust was a great example of that. Silicon Valley was swimming in venture capital but it became obvious that all these companies had great ideas but there was no way to monetize them. Advertising on the web, at least stuff like pop-up ads and the like, doesn't seem to be a big money maker like people hoped it would be. So what will it be?I work at Genentech and lilke the article said, we are switching to Google Apps but I guarantee Google didn't give it to Genentech for free!! Google isn't that generous, there is a profit motive behind everything they do, or at least there better be, or the stock holders aren't going to be very happy.It's amusing and interesting to watch these new strategies come and go. Free isn't really free, because if they didn't catch you and get you to subscribe after you tried the service, then they didn't succeed. So it was free to you but it cost the provider lots of money and they may have even gone belly up as a result of their business model. What's it worth for you or anyone else to pay for something that was "free" before? Is it a site that's "ad free" if you sign up? Is it a higher tier of service? Is it more "freebies"? It must not have been all that great a service if once they placed a dollar value on it you (and a lot of other people) bailed.It will be interesting to see where this goes and what people will eventually sign up and pay for after the "free" trial is over.Mazz

[guscave]

I talked about something similar to this several months ago when Google launched a free (legal) music downloading service in China: Here's a link: http://www.mercurynews.com/business/ci_ ... 6Basically the way it works, Google pays the copyright holders a license fee from their ad revenues. The end users (the public) get music for free. So far it seems to be working to the point that the old search engine Baidu which use to point people to illegal downloading sites, are now hurting. I believe its just a matter of time before this business model finds its way to the rest of the world.

[mojobone]

HA!http://www.gearslutz.com/board/4402533-post15.htmlWe used to have a local bakery that advertised, "FREE SMELLS!"

[waltzmastering]

Jul 13, 2009, 10:43am, fusilierb wrote: I use so many free services everyday, that I've become used to it. I read my news papers for free, stream music, use free email accounts, free graphics programs, free TV, free movies, free online storage and on and on. It's crazy really. And yes, eventually someone has to pay. Surely your paying a little something for these services through an internet provider, unless some wifi tapping is going on.I do agree with Mazz and Coach D though that, "Free is not a business model, it's a marketing tactic to attract people to the product"...and with music, if you offer a free download or 2 and people like what they are getting , it's likely to attract the same people to spend the money on a full album, concert, merchandise or licensing etc.

[jonathanm]

I'm not sure that free is even a marketing tactic anymore, at least in the field of music. I talked with several non-musician friends, and they view free music as a right. They honestly said they don't know anyone that pays for music anymore. They all have iPods and Zunes loaded with literally thousands of songs, and they brag that they didn't pay for any of them.When I say that it is stealing, they have one of two replies. Either they say that the big record companies have plenty of money and have been stealing from the public with insanely high prices for a long time, or they say that it's actually not stealing, but instead helps to publicize the artist, and artists endorse such activity. Both answers are denials of the truth, but they reflect the attitude of the general public.As mentioned in the related thread, we have to do things simultaneously. We have to get a new profit model going, while at the same time enforcing the law (with prosecution) and educating the public that it is stealing.

[mazz]

The public in general doesn't understand the concept of intellectual property. All they see are the very top, very rich artists, but they don't see, or even realize they exist, people actually making a day to day living from royalties, like some of the folks here. Yes, maybe The Stones might not miss a few thousand bucks here and there, but that's not the point. The point is that the concept of intellectual property is there partly to enable people to profit from their creations so they can actually make a living at it. If it was presented to the public correctly in the first place, in a way that they could relate to, we may not be having this discussion now.A new business model is necessary, that's blatantly obvious. The new model must be able to create royalty income for the artists. The last time I checked, my mortgage company doesn't accept "publicity" in lieu of money.