Tuesday, 25 March 2014
The value-of-free; companies using ‘free’
Candy Crush is fun but what else is free? This follows-up a previous post by listing commercial use of ‘free’, in a timeline.
In the beginning
The technical specification of the internet was made freely available (1969).
Software that operates the internet are downloadable free. Smtp, one of them is now the engine that drives most email systems today including public email services. Would this have happened if not?
BSD, an early Unix operating system was made freely available (1977), a contrarian action then.
In commercial software, ‘free’ started with shareware (first on bulletin boards) which is really a limited function copy of a paid version. Many simply used the shareware versions for free. McAfee which introduced Virusscan, its anti-virus software (1987), if my mind serves was the first commercial software company that listed using this model. Today, free open source software has started replacing paid software. Shareware is passé.
As services began to be introduced, they too were mostly gratis. Newsgroups (discussion forums), public email such as Hotmail, the early search engine Archie (1990), IRC (early messaging service), Mbone for video streaming (1992), etc.
Blogs (1994) began a new media form, books were downloadable from project Gutenberg, eZines (online magazines) abound, all complimentary. The publishing sector was in the early stage of being transformed.
Free seem to underlie the foundation of the early internet. Perhaps this early history had a role in developing the culture of ‘free’.
Netscape was the first high profile company that used free by giving away its Navigator browser (1995). It caused a stir.
Then Yahoo (1996) with news content, Hotmail (1996) for email, Craiglist (1996) for classified advertisements (except recruitment), Google’s search (1998), etc.
Napster (1999) did it for music and to me, the creators were truly innovative. Not only did it eventually re-price, perhaps right-price music, it birthed the sharing economy. Music shouldn’t be free but it ought to be cheaper now that the internet is used for distribution. Their peer-to-peer model used the direct model of the internet to do this by cutting through middlemen and removing traditional distribution costs. The p2p model is now reinventing industries, a massive opportunity. See http://internetbusinessmodelasia.blogspot.com/2013/11/the-peer-to-peer-business-model-part-i.html
These are a few pioneering commercial entities that continued with ‘free’, the beginnings of ‘free’ as a business model. ‘Free’ made them. They also made free what it is today. Ask them if free have value?
Some use ‘free’ strategically
Dropbox, the free cloud storage provider uses ‘free’ strategically and succeeded in building up market share. Facebook, Weibo, LinkedIn, Twitter, Instagram, Pinterest trade ‘free’ use for data, making them. Others like WhatsApp, WeChat, Zynga use free for market share. ‘Free’ helped YouTube transform tv. Yelp, Quora, Evernote, Spotify, Flickr business model seem to be based on ‘free’.
Would Android phones be so pervasive if not for Google’s game plan to give it away?
The net is famously full of free stuff so much so that it has entered the consciousness of consumers and expectation so perhaps this is one reason these firms use ‘free’ but whatever, ‘free’ has entered the lexicon of business.
They are mostly tech firms.
But actually non-tech firms, conspicuously, have also been using ‘free’
Local Motors Inc (US) open source their car designs so others can improve them. BMW released a digital design kit for its GPS for anyone to design telematic features of cars. Gratis R&D!
CAMBRIA, an Australian biotech institute makes available their results to scientists.
‘Liter of light’, a social enterprise put the design of its cheap ‘light’ (light up homes in slums with a litre bottle filled with water) in the public domain to help it spread.
TED created a free license for others to host local conferences, called TEDx. Now TEDx events are held every day somewhere in the world. These events add lustre to the main conference rather than dilute them. This made the TED name a global brand at no cost.
The open source model is used by software firms for marketing, sales and R&D. It’s about global reach at no cost with free software. What is the traditional cost to do this; foreign offices, staff, risks, marketing budget?
The Guardian newspaper in Britain encourages public access to a data source of their articles through an engagement platform. This enhances its content, inputting new ideas and no doubt strengthen customer relationship. This taps into outside creativity. It is using ‘free’ in business development.
Free has little friction
And so it can be a powerful tool for business development.
‘Free’ is being used today for market surveys, marketing, sales, design, science, product development, service development, community development, social development, R&D. It has been used to build brands and for global sales. It is one way to attempt the network effect to scale up an opportunity fast.
The freer it is, the faster it spreads.
More conventional companies ought to look into it. After all, it’s free!
For an analysis of the value-of-free, see http://internetbusinessmodelasia.blogspot.com/2013/06/the-value-of-free-seeming-paradox-but.html