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Long Live Free: How Free Makes Money

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The concept of "free" isn’t exactly a new one, but it is taking on a sort of new life in the digital age as major publishers (slowly) warm up to the concept – except the recording industry, of course, where the "free" is usually coupled with "to help make us a lot more money."

Long Live Free: How Free Makes Money
Long Live Free: How Free Makes Money

The RIAA doesn’t have a lot of friends these days, even from the traditional bandwagon – Radiohead and Trent Reznor are the latest to abandon their labels to foster better relationships with their audiences.

While the recording industry is busy filing lawsuits, it has ignored the relationship aspect of selling – it’s often a good idea to have your target market like you – and acts as though production costs aren’t significantly lower in the digital media age. Downloads cut out the costs of manufacturing, distribution, and, thanks to the socially viral element of the Web, even advertising.

Hence the reason Apple’s Steve Jobs has repeatedly told them to shove it when they’ve wanted to raise iTunes download prices by a factor of three. The low overhead of online business is what has led to some analysts placing 100 times revenue values on certain well-read blogs.

Major newspapers are learning this valuable lesson, too. Publishing 2.0 eliminates much of the cost associated with printing, which is (presumably) the reason to charge for content in the first place, generated advertising revenue notwithstanding. The New York Times is one of the latest to remove the monetary barriers to its online content.

You’ll have to register instead, though, to give the advertisers the demographic information they crave – even if there have been entire (if unsuccessful) petitions in the past to drop those registration pages. London-based Financial Times was less generous, allowing 30 free pageviews a month with registration.

Two Laws of Online Content

1.    People don’t want to pay for it.
2.    People don’t want to tell you their life story to get it, either.

That’s because Internet users, like humans as biological beings, are inherently selfish and lazy. That’s not a swipe at humanity, just the reality. People want their content free with a certain immediacy – damn the advertisers.

The NYT was making about $10 million in subscription fees, but has gone the registration route instead, believing they can surpass that number with advertising revenue – basically the broadcast radio and television model that has worked for the better part of half a century.

So we know that "free," as a business model, works to generate revenue – if not, then all those PR flacks out there are wasting company time and money handing out schwag-bags at conferences and public events.

The Law of Gimme-Gimme

People will take anything as long as it’s free, whether or not they need it or want it*.

The latest speculation is that News Corp. mogul Rupert Murdoch is looking to loose the content bonds on the Wall Street Journal. Some think he’s a fool if he does, arguing that quality content demands payment. But two things we do know: Murdoch has made a lucrative career by not being stupid; and see the First Law of Online Content above.

What Small Businesses/Publishers Learn From the Big Guys

1.    People visit content if the cost of doing so is low (registering) or nil in terms of time, money, and/or effort.
2.    Freeing your content, bringing it out from behind walls helps ensure more search engine traffic and pageviews                 (which is, of course, salable to advertisers).
3.    A happy visitor is a return visitor.
4.    You can sell two products at the same time: pageviews to related advertisers; your own, unique product related to             the content on the screen.

The Conundrum

Depending on what you’re selling online, the "free" business model may not make sense to you. It’s easy for publishers with no printing costs to say advertising and search will get you to the next level, but what if, like the RIAA will argue, you have a tangible product? Free won’t cut it.

Again, this depends on that which you’ve based your business. Radiohead has a new CD and it can be obtained for free. It’s more of a donation model, but they have larger packages for sale that includes artwork, lyrics, and even vinyl records. They’re banking on the up-sell, as well as concert ticket sales.

But you can also use free content as a promotional vehicle, so long as it’s not obvious search spam that will get you penalized or dropped from search results altogether.

Blender company Blendtec is probably the best at utilizing the new media to generate sales. The "Will It Blend?" series on YouTube and Blendtec’s homepage is a creative way to do entertaining product demonstrations.

Or maybe you sell vacuum cleaners and parts. You can build a content structure around that without giving away your product, of course. People are always looking for cleaning tips, or maybe they don’t know how to repair a snapped belt. You can be their source for that while avoiding being labeled as spam, and promoting your product at the same time.

Whatever you’re doing online, it will require certain things. Be creative, be open, be necessary, be useful. But above all, be free.  

 

*This law does not apply to content, but to more physical products — nobody likes spam or splogs.  

Long Live Free: How Free Makes Money
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  • http://healpain.blogspot.com Jennifer Mannion

    I think it’s great that there are so many ways to legitimately drive up traffic for free. i think it’s also great how more and more people are offering free services or snippets so people can judge whether or not they want to fork over money for a product. Everything is going up in price these days and the US economy is not at its best – whoo hoo — free stuff — I say bring more of it on!
    Jenny

  • http://www.harmonypartners.com/ Colin Bingham

    I own a free online dating website [Harmony Partners] and I am of the firm believe that being free works, if for no other reason than that quoted in your article that and which I have taken the liberty of quoting here: “People don’t want to pay for it” and “A happy visitor is a return visitor”. All round an excellent assessment of what a “free website” should be.

  • Bill

    In this day and age, the consumer has a voice, many times a voice of reason, others not so much the voice of reason. The basic premise that I see happening in the media world is that consumers are more and more strapped for time – commutes, long work hours, children and activities such as soccer, gymnastics etc, church activities, social gatherings and of course catching a movie and dinner with the significant other all drain our entertainment, news and other media time down close to nill.

    Consumers want relevant content, when they want it, how they want it. It does not seem to be much to charge $9.95 per month for a membership to a content driven site, however, if the content is only read 3 times per month, that is a waste on the consumers part, and the consumer is getting wise to their spending with the current economy in the United States.

    With that being said, free content that paves the way to advertising revenue, or product upsells is a viable method to still provide relevant content, within the scope of the consumers time frame, desired content and budget and generate revenue.

    I would gladly pay $.99 per song to download them legally, and get only the songs I want delivered to me, with the allowance I can place them on any device I may have (iPod, CD, Media Center) for my own use. Why do I want to buy an entire CD just to get two songs to zip over to my MP3 player and those are the only two songs I will listen to? I don’t, and many others do not either.

    Same is happening in the television world. Cable and Satellite providers provide several “packages”, but the mix of channels generally is setup so that to get a good variety and the channels that a husband and wife want, along with the childrens desired channels, the highest cost package must be purchased. Why don’t they offer a la carte? The consumer could get only the channels that they desire, and it would most likely be more lucritive for the cable/satellite operators as well as the networks.

    Media has to come to grips with the modern day consumer to survive, or we will start seeing the downfalls of major media corporations that have long historys, but a refusual to change, adapt and meet their consumers’ needs.

  • http://www.osgfx.com scott Adie

    The value of the ‘free’ concept is much greater in internet marketing than traditional retail marketing for a number of reasons. One of the primary reasons is that, as a tool to drive traffic to your web site, it is one point-of-contact with potential customers that has some sense of customer relationship consideration. Otherwise, internet marketing can easily become pretty cold and dry based only on numbers. There is no shortage of online examples of this. And, there are a great many times when that’s all a customer wants. When it’s just click-and-pay, there is no sense of relationship between the customer and the business involved. Offering ‘free’ stuff won’t necessarily fix that but saavy marketers can certainly use ‘free’ stuff as a springboard for more successful customer relationships. How to make it more personal is the big challenge for internet business.

  • http://www.leehansen.com Lee Hansen

    I’m a publisher and my niche is arts and crafts users, particularly scrapbooking and clip art enthusiasts. Free is the model I have used for 10 years on my web sites. I publish articles, graphics. I give it all away for personal use without registration or even so much as an email address. As a marketer with plenty of direct response experience, I’ve tested various subscription models but in the end I’ve found I can drive traffic to the products I want to sell and to my other web sites by offering plenty of useful free content that’s easy to download. Ad revenue pays the freight and buys my art supplies.

  • http://www.seotampa.com/ SEOTampa

    The only downside I can see is when companies splatter the word ‘free’ in excess across their website, which can cheapen the image of their product or service. While getting something for free is essential in some competitive markets, you must be careful to keep the image of your business or products as high quality items.

    For example, infomercials don’t just sell one product for one price. They sometimes throw in two or three extras at no cost, raising the suspicion that the products are so cheap, they could sell 10 for the price of one and still make a product.

  • http://www.commercemaven.com PS Love

    Unless you’re in some sort of very popular or unusual market, in my opinion, FREE is the way to go.

    When I started my last dot.com selling craft supplies, I used to list free instructions and recipes on my website to keep them coming back. I had a free email chat list which kept my company name in front of them every day. This all made the customer feel like they owed me their business. It worked wonderfully, so much so that I sold the corporation after 9 years and now am looking to start something new to do.

  • http://www.myhendersonvillenc.com Reggie Grant

    I just tried to use your email button to send your article to an associate. I recieved a warning message, telling I am not authorized to do this? Ironically, Is this a paid feature?

    • Jason Lee Miller

      Sorry you had trouble, Reggie. It’s not a paid feature, just a glitch we’re working on.

      cheers.

  • http://www.globalaudiobookstore.com Janna

    Everybody on the internet seems to be offering things for free. I sometimes wonder how long is it going to last before people start waking up to themselves and realise that there is really no such thing as a ‘free lunch’. We are all paying for the free product/service in the end.

  • http://freeListingplace.com John Jeffrey

    Yes this site here is free to join and you can put unlimited ads up free of charge.Plus you can make money brining in new members.But why is it so hard to get members to join a site offering all this for free?
    It doesn’t make sense at all its a great site but no one joins under me.I hate to complain but why does it not fit anyones caliber
    http://freeListingplace.com/?ref=4

  • http://www.profitindex.org The Prophet of Profit

    I recently commented on this on my blog. I research online money making strategies. The ones that work are published, and people comment on the methods. One of those methods I’ve experimented with works really well, and that is rehashing seeding freely available reseller programs on bit-torrent and similar technologies. I found that my ebook how to get everything online for free, was easier to give away (over 4,000 downloads in one month), than it was to sell. The trick here is to find the stuff that is relevant to your ‘paying’ niche market. A larger role plays more to The Law of Gimme-Gimme, and can hurt the bottom line. I give stuff away encouraging other user interaction on our page. And have benefited immensely from our free open structure. And I agree, the riaa doesn’t have very many friends these days. Thanks for keeping up to date, unlike other writers in your genre. I’d be happy to hear other’s opinions on this.

  • http://nigeriantimes.blogspot.com Orikinla Osinachi

    Even though, there is no free lunch in Freetown, but I agree with the popular maxim that the best things in life are free.

    Online, content may be free, but you have to pay for the Internet connection.
    Blogger is a free blogging service and you can even make money from Google AdSense in the long run. But you have to pay to be online.

    The big gainers are the ISPs and leading Search Engines who have added more to their services. From being search engines, they are now media channels competing with the mainstream media and publishers 24/7.

    It is good to be free. But I think YouTube is making all the money while the millions of people posting their videos are the losers, because they pay for every second they spend online to upload their videos. But how much are they making from the traffic?

    Being on Blogger is still the best. Because, Blogger gives you the freedom to choose your content and your adverts. A leading British Insurance company paid me upfront to advertise on 11 of my blogs on Blogger and that revenue paid my Internet bills.

    This is my own open-minded opinion.

    I am paying for the Internet connection to post this comment and contribute to the content of your website. So, it is not totally free. I paid for the transport to get here.

    Cheers and God bless.

  • http://www.indiansummer.com Jeff Barton

    I’ve found that posting to sites like this that also post your web address help to increase your rankings on the search engines. This is just free advertising that helps me make more money.

  • http://www.microdesign.nl webdesign webdesign

    I love the free concept ! i build alot of websites for work and i also notice that the free concept works really well on the internet !
    and if it makes money well count me in

    • http://www.altha.nl/ Webdesign Nijmegen

      Previous commenter obviously likes the free webdesign links too!

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