Here is my response to Chris Anderson’s post below about my review of his book Free: The Future of a Radical Price. See my earlier post An interactive review of Free by Chris Anderson for details of the review and this exchange of ideas.
Dear Chris,
Well, yes. Maybe I was a bit slow in not realising that Free was really about “freemium”. On the other hand, Free was the title of the book; if it had been called Freemium, I would not have complained.
But let us leave that on one side. What is unquestionably true is that you devote a lot of space in the book to examining the freemium model and that some innovative things are occurring under that label. I would even include the FT’s model for online access.
I like the way that you phrase the distinction between freemium and the old practice of free offers in your response:
Rather than giving out few percent of your product away for free as marketing, hoping to sell the rest, you give away most of your product for free as marketing, hoping to sell to a minority.
That is an intriguing notion, if more a matter of quantity than an entirely new phenomenon. As you say, the software and internet world is now rife with freemium-type attempts to make money.
One thing I like about your focus on freemium is that it moves the debate beyond an argument over whether everything should be paid for online or everything should be given away. The latter implies that the entire media industry can become advertising-supported, which I doubt.
Still, as I say in my review, there is a lot of experimentation going on with freemium pricing models and, in many cases, it has not been proven conclusively to work – one exception being the open source software industry. So I would be interested in your thoughts on these questions:
First, can freemium can really spread far beyond the software and internet industries? It clearly faces a lot of barriers in manufacturing or services that involve human interaction, such as health and hospitality, which are unable to send out free samples.
Second, is the point of freemium marketing or advertising? In other words, do companies need to get a big audience by distributing free content in order to attract advertisers or to market their premium services to larger audiences?
Third, how large do you think revenues from freemium-type models can be in the media industry, and can they replace the loss of traditional forms of advertising?
All guidance gratefully received.
John
