Free is not always bad!
In this business essay, I would like to go deeper into the essence of the saying “free cheese is only in a mousetrap” and try to simultaneously refute and confirm this stereotype.
At the dawn of Russian Internet space, it was possible to observe the emergence of a number of mass Internet services that provided their technological resources absolutely free! And if now this model has become familiar, then a few years ago, this altruism of developers was suspicious. Really! For Russian-speaking users of the global web, the word “free” gave rise to mixed feelings - it was attractive, but also caused some doubts about the quality of the product - the website owners could announce much more than what their service was really capable of.
Even now, one may encounter a bias towards the free offer. Consumers are aware that start-up entrepreneurs are interested in using any schemes that promote their business. Also, we all understand that getting something for free, most likely, we will have to pay later. But under what circumstances we do not know.
I propose to look back and follow the path of the emergence of such a “democratic” concept. This will help us to understand where it is worth waiting for a trick and what is the secret of motivation of those who offer us free pleasures.
Oddly enough, but the sources must be sought in the history of American business ...
More than a hundred years ago, someone King Camp Gillett invented a razor with a replaceable blade. He came up with a very promising idea - to sell his razors at the lowest price, and to get the main income from the sale of replaceable blades. This strategy is called "Freebie-marketing." She had a huge impact on the development of a market economy in the United States and around the world. The funny paradox is that, before becoming a successful entrepreneur, King Camp wrote the book “The Human Drift”, in which he predicted the success of the state monopoly in all industries.
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Today you can find many successful examples of using the freebie model:
- free installation of coffee machines in offices and making a profit only from the sale of coffee beans and cream bags.
- free provision by mobile phone operators of mobile phones along with a service contract (this model is most widely distributed in America)
- free distribution of their music tracks by famous musicians.
With the advent of the Internet, freebie-marketing has gained tremendous popularity online, acquiring the characteristics of the Internet industry. Many Internet services are based on freebie tactics: Gmail , Comcast , search engines. For most sites, whose main income comes from the sale of advertising, you can apply the freebie model.
I must say that the scheme described may not be beneficial to the consumer. The most vivid example: the strategy of “binding” to its software products, which is demonstrated by the company “Microsoft”.
But our research does not end there. In 2006, the famous American businessman Fred Wilson in his blog described the following method of generating income: building up the user base by providing free full functionality, and for an additional fee providing access to advanced service features. This strategy is quite widely represented on the Internet: Skype , Flickr.com , Box.net , Ucoz.ru , Livejournal.com , Last.fm. It received the name "Freemium" from a combination of the words "free" and "premium". Can we say that freemium is the next evolutionary stage after freebie? It seems to me obvious logical interrelation of these models.
Many companies build their business model based on a combination of the two strategies described above. The most successful example in Russia, in my opinion, is Livejournal.ru .
Unfortunately, often the creators of startups are not fully aware of the essence of the market in which they are going to make millions. This leads to a loss of focus from the main problems of monetization of commercial Internet services:
- Freebie model is effective in most cases only with a mass audience.
- Freemium involves the creation of compelling reasons for the user to use paid services now, and not in a year. This is a serious work that requires a deep analysis of the target audience of the site.
With this small article I wanted to show how important it is to understand the basis on which the framework of a network economy is built. Soon, many things that previously seemed amazing will be a common event for us. Modern technologies in a strange way change our reality, but the scenarios of these transformations originate long before the appearance of the Internet. Without knowledge of history, it is difficult to understand the significance of today's phenomena. For Internet users, I recommend to take more boldly in possession of the benefits that the global web offers, and for young venture entrepreneurs not to neglect scientific theory.
via UcoZ Company Corporate Blog
At the dawn of Russian Internet space, it was possible to observe the emergence of a number of mass Internet services that provided their technological resources absolutely free! And if now this model has become familiar, then a few years ago, this altruism of developers was suspicious. Really! For Russian-speaking users of the global web, the word “free” gave rise to mixed feelings - it was attractive, but also caused some doubts about the quality of the product - the website owners could announce much more than what their service was really capable of.
Even now, one may encounter a bias towards the free offer. Consumers are aware that start-up entrepreneurs are interested in using any schemes that promote their business. Also, we all understand that getting something for free, most likely, we will have to pay later. But under what circumstances we do not know.
I propose to look back and follow the path of the emergence of such a “democratic” concept. This will help us to understand where it is worth waiting for a trick and what is the secret of motivation of those who offer us free pleasures.
Oddly enough, but the sources must be sought in the history of American business ...
More than a hundred years ago, someone King Camp Gillett invented a razor with a replaceable blade. He came up with a very promising idea - to sell his razors at the lowest price, and to get the main income from the sale of replaceable blades. This strategy is called "Freebie-marketing." She had a huge impact on the development of a market economy in the United States and around the world. The funny paradox is that, before becoming a successful entrepreneur, King Camp wrote the book “The Human Drift”, in which he predicted the success of the state monopoly in all industries.
')
Today you can find many successful examples of using the freebie model:
- free installation of coffee machines in offices and making a profit only from the sale of coffee beans and cream bags.
- free provision by mobile phone operators of mobile phones along with a service contract (this model is most widely distributed in America)
- free distribution of their music tracks by famous musicians.
With the advent of the Internet, freebie-marketing has gained tremendous popularity online, acquiring the characteristics of the Internet industry. Many Internet services are based on freebie tactics: Gmail , Comcast , search engines. For most sites, whose main income comes from the sale of advertising, you can apply the freebie model.
I must say that the scheme described may not be beneficial to the consumer. The most vivid example: the strategy of “binding” to its software products, which is demonstrated by the company “Microsoft”.
But our research does not end there. In 2006, the famous American businessman Fred Wilson in his blog described the following method of generating income: building up the user base by providing free full functionality, and for an additional fee providing access to advanced service features. This strategy is quite widely represented on the Internet: Skype , Flickr.com , Box.net , Ucoz.ru , Livejournal.com , Last.fm. It received the name "Freemium" from a combination of the words "free" and "premium". Can we say that freemium is the next evolutionary stage after freebie? It seems to me obvious logical interrelation of these models.
Many companies build their business model based on a combination of the two strategies described above. The most successful example in Russia, in my opinion, is Livejournal.ru .
Unfortunately, often the creators of startups are not fully aware of the essence of the market in which they are going to make millions. This leads to a loss of focus from the main problems of monetization of commercial Internet services:
- Freebie model is effective in most cases only with a mass audience.
- Freemium involves the creation of compelling reasons for the user to use paid services now, and not in a year. This is a serious work that requires a deep analysis of the target audience of the site.
With this small article I wanted to show how important it is to understand the basis on which the framework of a network economy is built. Soon, many things that previously seemed amazing will be a common event for us. Modern technologies in a strange way change our reality, but the scenarios of these transformations originate long before the appearance of the Internet. Without knowledge of history, it is difficult to understand the significance of today's phenomena. For Internet users, I recommend to take more boldly in possession of the benefits that the global web offers, and for young venture entrepreneurs not to neglect scientific theory.
via UcoZ Company Corporate Blog
Source: https://habr.com/ru/post/29362/
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