Tag Archives: Radiohead

Insights from TribeCamp Pt. 2: Free as a Business Model

Along with LaunchMemphis, LunaWeb recently co-hosted TribeCamp, a day-long conference on social media, web topics and professional development. We’ll be posting notes from some TribeCamp sessions over the next couple of weeks. The posts will be on a variety of topics, from social media to production to content.

Free as a Business Model - Blake Palmer

Is there such thing as a free lunch?

In most industries, no. Sure, a business will tell you that such-and-such is free, but only if you jump through these hurdles, pay for this other thing, or face a hidden fee later. “What’s the catch?” we, the cautious consumers, have learned to ask. We have been burned before.

It’s just the laws of supply and demand at work. Most products are inherently limited in supply and simply cannot be given away for free, lest the manufacturer lose their profit. But what about Internet content, which has no limit? With ever increasing supplies of bandwidth, storing and processing, we can produce all the online music, blogs, social networks and cat videos that the public could want.

So, can we have at least a cyber-free-lunch in this environment of unlimited supply? Blake Palmer argues that it’s not only possible, but inevitable. Just look at services like Flickr. They offer a great service for no charge at all. If, however, you want unlimited storage, you can pay a small fee to become a premium member, and Flickr can make enough money from the small percentage of users that opt for premium that they can keep the rest of the site up and running. And a premium option is only one model for using “free” as your business model.

The band Radiohead posted a whole album for download to their website, and asked listeners to pay whatever they wanted to for it, with zero as an option. They made more money than they would have with a record label, plus they earned good will and great publicity.
Can we one day have a free lunch outside of the internet? Some businesses are already working on it. Blake cited a gym in Europe that offers completely free memberships, but if you don’t go at least once a week, you have to pay for that whole month. Ryan Air now offers travel for as low as one euro, and hope to soon offer completely free flights, while they make all their profit off of the extras, like checked luggage and-in flight food and drink.

It’s about thinking outside the box. Turning the traditional business model on it’s head and creating an innovative relationship between the consumer and the business. And isn’t that what Web 2.0 is all about?