Most of the time, the management books I read tend to re-hash the same facts over and over, so although the facts are good, I feel like I’m experiencing deja vu, like I’m reading the same book over and over.
Chris Anderson’s book Free, however, definitely has some new concepts – and that’s a great thing!
Anderson has noticed that, especially with the rise of the electronic market on the Internet, more and more things are being offered for free. Is this the death of business? Are free products going to eliminate many paid products? Are we seeing the death of multiple industries, killed by a thousand free competitors?
In a nutshell, no.
Instead, Anderson argues that there are many ways to make money with free! He outlines several main approaches:
- The “Discounted” model, which includes options such as “buy one, get one free”. You’re not really getting a second copy for free. You’re getting two copies in exchange for some money. This is the model most commonly still seen in the physical world, outside the internet.
- The “Freemium” model, where users can pay for added features or enhancements. Super popular in apps or other programs, where users are willing to pay to unlock custom content or to remove advertising.
- The “Unlimited” model, where users pay a single price to access as much content as they want. Netflix is the prime example.
- The “Limited Time” model, where users can try a free trial version, intended to get them hooked on the product, before continuing to buy the full version when the trial expires.
- The “Third Party” model, where users are the product, not the customer. A program might gather data on its users in exchange for giving them a free tool – and then sells this data to interested companies.
- The “Reputation” model, where the end goal is not profits, but reputation, recognizability, popularity. Think of comedians who tweet.