So, as many know, I have a few ideas for businesses that I’d absolutely love to get off the ground in the next few years. Most of which are internet based. I’ve done a lot of research on the different models of biz that are electronic in nature. Just this morning I came across this very interesting article from WIRED magazine. Click here to read it!
As storage and bandwidth and computing power has become pretty much too cheap to meter, Chris Anderson argues FREE is the new model of biz. Or, better yet, the Freemium model of biz is the future. Freemium is simple, though has a few models, but the bottom line is the same: a version of a company’s service is free, but the premium version comes with a fee. For example, Anderson wrote a book. The book has many costs to make, therefore can’t be free. However, you can download the entire audio version for FREE. The reason, it essentially costs them zero to ship it through the internet freeway (no pun intended :-). Anderson’s hope is that, of those who try the free version, a certain fraction of them, say 20%, will want the premium version (the book), and thus pay for it. Same thing with David Jay’s Showit software…all of it is free (just with limitations), though has a premium version with a fee. Bottom line: try before you buy.
Of course, the FREE model is often based on the advertising model. A few examples you might have heard of: Google, Facebook, Yahoo. Look at all the stuff Google provides for free: email, tons of applications, blogger. Yet these are each multi billion $ companies. Advertising. Lots and lots of advertising.
I think it’s very very interesting. To me, I’m actually willing to pay for a service so long as it’s exceptional. Often these companies that have a fee don’t want to be the biggest, they just want to be the best and not at the will of their advertisers. Smugmug is a perfect example. Make sure and read their about page I just linked to. Another great example: Squarespace. And I quote: Our small team consists of solely bio-worthy names, and due to our entirely organic revenue growth, we operate free from the restrictions and obligations of organizations controlled by outside investors. Note, however, even with Smugmug’s and Squarespace’s devotion to a fee based model, they still offer FREE trials…try before you buy.
Here’s another interview regarding FREE vs Freemium vs Fee.
So where’s all of this headed? Not sure, just think it’s very interesting. I also wonder how it relates to photography. It actually reinforces why photographers charge the end user, and why great photographers charge a premium…because their talents and time demands are highly valuable. Translation, they aren’t too cheap to meter. Of course, it highly relates to the shoot and burn model (I shoot, then burn them all to a dvd for you to do whatever you want with). So, why doesn’t every photographer just do that? I’ll tell you exactly why…because most people want to try before they buy. That’s why most photographers charge a small fee for the session, but then make a big margin on product sales. It’s the try before you buy model.
There’s many more implications on my mind, but time is short…so I’m done.