Free
August 2009
There has been quite a bit of discussion and commentary lately around the concept of giving products and services away for free, at least in part due to the publication of the new book “Free”, by Chris Anderson. Obviously, the Internet has made “Free” the expected price of many intellectual products like music and news, but also puts pressure on the providers of more expensive intellectual property — like software.
The problem with giving product away for free, of course, is that you can’t make any money that way. The dot-com meltdown of a few years ago taught us that companies can’t survive on volume alone without revenue and profit. So, if you are going to give something away for free, there has to be an expectation of revenue somewhere and someway to pay for it.
A century ago, Gillette rocked the business world by giving away razors in order to create demand for high-margin blades. In recent years, ink-jet printer manufacturers sold their printers at or below cost and made up for it with high-priced ink cartridges. Many Internet-based businesses that are giving content away are paying for it through advertising, much the way TV and radio (as well as controlled-circulation magazines) have for years. Others appear to have no valid business model at this time (Craig’s List, Twitter, FaceBook, YouTube).
Nevertheless, companies with real products to sell can and should give something away to generate good will, awareness, and credibility. Many already do this through their “lead generation” budget. The giveaways often include white papers, seminars and webinars, and sometimes whole books (electronic or paper). The key to success is to make the give-away something of value to the user – and not just a thinly disguised sales pitch. The benefit gained from the “giveaway” should help build future revenue.