Can companies thrive by giving away products and services?
For a growing array of companies, giving their product away is now a business plan. Games, music, software—just about anything that can be digitally replicated and distributed via the Internet—all are available at no cost to consumers. Some businesses follow a cross-subsidy model, where one product or class of customer supports another. Some rely on free trials or on revenue from third parties such as advertisers. And other businesses are pursuing a “freemium” model, where the basic service is free of charge but upgrades cost. As the economy of free takes hold, companies and artists in some industries, such as music streaming, are pushing back against the pressure to offer their work for nothing. Among the questions now under debate: Is the freemium business model viable? Is free good for the economy? Can traditional businesses compete with free?
Anderson, Chris, “Free: The Future of a Radical Price,” Hyperion Books, 2009. The then-editor of Wired magazine writes the definitive book about what he calls “freeconomics,” explaining the practice of various business models involving product giveaways and advocating for the growth of the free economy.
Baxter, Robbie Kellman, “The Membership Economy: Find Your Super Users, Master the Forever Transaction, and Build Recurring Revenue,” McGraw-Hill Education, 2015. A consultant who has advised Netflix, SurveyMonkey and other start-ups discusses the pros and cons of the “freemium” model.
Seufert, Eric Benjamin, “Freemium Economics: Leveraging Analytics and User Segmentation to Drive Revenue (The Savvy Manager's Guides),” Morgan Kaufmann, 2014. A marketer outlines how to analyze data generated by freemium products to boost retention and add revenue.
Doctor, Ken, “Newsonomics: 10 numbers on The New York Times' 1 million digital-subscriber milestone,” NiemanLab, Aug. 6, 2015, http://tinyurl.com/
Gladwell, Malcolm, “Priced To Sell,” The New Yorker, July 6, 2009, http://tinyurl.com/
Jefferies, Duncan, “Responsibilities of the Gaming Industry In Protecting Children's Rights,” T Partner zone UNICEF, The Guardian, July 21, 2015, http://tinyurl.com/
Keep, Elmo, “The Case Against Free,” Junkee.com, Nov. 3, 2013, http://tinyurl.com/
Leonard, Devin, “That's Business, Man: Why Jay Z's Tidal Is a Complete Disaster,” BloombergBusiness, May 28, 2015, http://tinyurl.com/
Sehlhorst, Scott, “The Freemium Business Model and Viral Product Management,” Pragmatic Marketing, 2009, http://tinyurl.com/
Wilson, Fred, “My Favorite Business Model,” AVC, March 23, 2006, http://tinyurl.com/
Reports and Studies
“Is Freemium the Right Business Model? 10 Questions to Answer,” Zuora Academy, http://tinyurl.com/
“Mobile App Advertising and Monetization Trends, 2012–2017: The Economics of Free,” App Annie, March 2014, http://tinyurl.com/
Bryce, David J., Jeffrey H. Dyer and Nile W. Hatch, “Competing Against Free,” Harvard Business Review, June 2011, http://tinyurl.com/
Kumar, Vineet, et al., “The New York Times Paywall,” Harvard Business School Case 512-077, Harvard Business Review, February 2012 (revised January 2013), http://tinyurl.com/
The Next Step
Statt, Nick, “Jimmy Iovine wants Apple to save the world from free music,” The Verge, Oct. 7, 2015, http://tinyurl.com/
Titlow, John Paul, “YouTube inches toward Netflix with its new paid subscription tier,” Fast Company, Oct. 21, 2015, http://tinyurl.com/
Waters, Richard, “Zenefits stretches ‘freemium’ business model,” Financial Times, Nov. 3, 2015, http://tinyurl.com/
Butterly, Amelia, “Amazon Prime 30-day trial advert ‘misleading’ says ASA,” BBC News, March 4, 2015, http://tinyurl.com/
Jurgensen, John, and Barbara Chai, “Apple to Pay Artists After Taylor Swift Protest,” The Wall Street Journal, June 22, 2015, http://tinyurl.com/
Manning, Brendan, “Free trials return low profit but high engagement,” The New Zealand Herald, April 28, 2015, http://tinyurl.com/
Bogost, Ian, “The Logic Behind the Sky-High Candy Crush Deal,” The Atlantic, Nov. 4, 2015, http://tinyurl.com/
Chang, Andrea, and David Pierson, “Nintendo unveils its first game for smartphones in long overdue move,” Los Angeles Times, Oct. 28, 2015, http://tinyurl.com/
Takahashi, Dean, “Game Insight's Anatoly Ropotov explains how to build sustainable free-to-play mobile games,” Venture Beat, Oct. 19, 2015, http://tinyurl.com/
Alpert, Lukas I., “For New York Times, a Gamble on Giveaways,” The Wall Street Journal, Aug. 3, 2015, http://tinyurl.com/
Borchers, Callum, “Undaunted by others' setbacks, Brockton startup targets hyperlocal news,” The Boston Globe, Sept. 27, 2015, http://tinyurl.com/
Mance, Henry, “Rebekah Brooks to pull down Sun's online paywall,” Financial Times, Oct. 30, 2015, http://tinyurl.com/