Free Advice and Giving the Cow Away

It there another word in the consumer mind that arrests our attention more than "free"?

There is little wonder that free has such a draw for consumers. The real mystery is how a growing number of companies generate revenue by "giving it away". In "Free: The Future of a Radical Price," Chris Anderson, the editor of Wired magazine and the author of "The Long Tail," sets out to explain why free is an increasingly compelling business model.

Mr. Anderson explains how the fundamental structure and economics of services delivered digitally has caused the free business models to become increasingly widespread. Central to the new "free economy," he says, are the "near-zero 'marginal costs' of digital distribution (that is, the additional cost of sending out another copy beyond the 'fixed costs' of the required hardware)." So Google spends billions on its software and infrastructure, to get its vast search engine up and running, but each incremental search costs it almost nothing.

For an example of this, please look at the wall street journal article at ...

http://online.wsj.com/article/SB124701229573408977.html for a full review

So what does this mean to those of us selling physical products out here in the real world?

Well it simply comes down to content, text content specifically.

Google has spent a king's ransom to develop software to evaluate web sites based on the content it finds when it visits. 

We have all had dealings with a customer who was "just smart enough to be dangerous".

The aim with educating our customers is to give them the tools they need to realize what a marvelous value you are offering as a business. (Assuming you are the best option to a discerning consumer). Even if you think you are not the clear leader in your field there are often unrecognized advantages ("Your Unique Selling Proposition") to dealing with your company which should be highlighted in your web site copy, along with any educational material, which would help your prospective customer realize you are the natural choice. See our article on how to develop an Internet Marketing Plan for more information on "You Unique Selling Proposition".

Free information helps to weed out unscrupulous competitors

Every industry has it's share of fly-by-nights, snake oil salesman and charlatans. An educated customer will see past the crooks and will appreciate it when you deliver real value. Use your website to educate your customer so you are not competing with bottom feeders and villains.

Free business models, whether purveying digital products or tangible goods, are based on cross subsidy -- that's why you get a "free" mobile phone when you sign up for a long-term service plan. In the digital realm, the "freemium" model offers the elusive free lunch. Many millions of Skype users for instance, making voice and video calls over the Internet, pay nothing at all, subsidized by a smaller group of customers who pay for additional functionality. The free service is a loss leader (and cheap marketing) for premium paid services.

Advertising is plainly the best known free model. You don't pay for Web searches, any more than you pay for network television, because in both cases ads are attached to the product you are getting free. As Mr. Anderson notes, though, advertising can't pay for everything online. If you have a blog, "no matter how popular," the revenue from AdSense -- a Google service that places ads on Web sites -- will probably never "pay you even minimum wage for the time you spend writing it."