Wall Street Journal discusses The Economics of Giving It Away
A couple of excerpts:
In a battered economy, free goods and services online are more attractive than ever. So how can the suppliers make a business model out of nothing? This article navigates the complexities of such a transaction, the examples they cite help illuminate the problem.
Long Tail author and Wired EIC Chris Anderson explains why the “zero sum” model doesn’t work alone in this economy—and teases his next book Free—in Saturday’s Wall Street Journal. The argument: “free” wasn’t enough before for all but a few and it’s not going to work now without a pay component, whether it’s “freemium”—“free as a form of marketing to put the product in the hands of the maximum number of people, converting just a small fraction to paying customers” or flat out charging for the bulk of goods and services.
The essay itself exemplifies “freemium”—free for anyone who wanders by WSJ.com, not just to those of us who pay to subscribe to the site’s full content. It works for the consumer, or as Anderson puts it, “It’s a consumer’s paradise: The Web has become the biggest store in history and everything is 100% off.” Of course, that’s until the products they use disappear because the money isn’t there.