The Idea Ether: A "Free" Market Economy

« Team matters | Main | indi Beta 2 Arrives »

Saturday, March 25, 2006

A "Free" Market Economy

I was reading a recent post by Fred Wilson on his A VC blog about his favorite business model for Internet companies. Basically his summary was to give a service away for free then charge for a premium or value added service to a subset of those who use the free service. After asking his readers for a name for this model he settled on Freemium.

What struck me by this post was that I have always been leery of the view that a small subset of a customer base actually pay for the rest...but the post brought me to a small epiphany (it may be obvious to everyone else, but it was not to me until now). Let's start with a question:

Q: How do you find and market to a customer base in the abyss of the Internet?

I call the Internet an abyss for obvious reasons. The Internet is a vast space with a massive number of people and a massive number of services and from this space how do you distill your market? What I realized was the free service offering was not there to acquire customers per se but to build a market for your real offering, and a market that you completely dominate. Follow this reasoning.

You come up with a great idea for a product or service you know some demographic of customer will pay for.
Instead of traditional demographic profiling, targeted advertising on search engines, etc you come up with another service which would be a draw to a superset of your intended market.
Put that free service online and through social mechanisms (word of mouth, etc) build up the potential customer pool (as Fred indicated in his post).
Offer your paid service to the free service pool, knowing that within your free service demographic is your paid service customer base.

So this free service is effectively a mechanism to create an singular advertisement medium where you know (a) your target customers will see the ad for your paid service and (b) you alone advertise in the medium. Rather than look at the free service users as your customers perhaps you should look at them as your potential customer base. The ones that will actually pay you for your product or service offering are your customers. This does not mitigate the cost of having to service those who use the free service. That is critical because your future paying customers are in there! Some may see this only working for services like Flickr where there is a basic (free) then pro (fee) service offering, but it could go way farther than that. Traditional product or service vendors could spend a fraction of their massive advertising budgets to build teams that create these types of free services which would draw in their intended customer demographic creating a medium to reach paying customers, while at the same time offering something that has high value to everyone who uses it. We could name it a free market economy but I think that term is already in use.

Saturday, March 25, 2006 in Cool Ideas | Permalink

Comments

canadagoosecastle.comRptyteqjp bbsocanada goose parkacrzoriqx dbpncanada goose outletezwnnijr uyavhttp://www.canadagoosecastle.comiulstpii chwqcanada goose parkavrusgzre lckacanada goose sale

Posted by: canada goose jackets canada goose jacket canada goose parka canada goose sale canada goose online canada goose outlet | Thursday, December 22, 2011 at 03:50 AM

fI ugg boots uk uL http://www.quick-date.co.uk/blogs/entry/ugg-boot-uk-94ad gH hogan sito ufficiale aM http://mfnq.com/blogs.php?action=show_member_blog&ownerID=6707

Posted by: HizEntinY | Thursday, December 22, 2011 at 03:51 AM

dY cheap ugg boots eW http://www.matusovci.sk/pg/blog/read/128442/real-ugg-boots-uk-26dn dY hogan sito ufficiale zX http://facemaze.com/blog.php?user=uggsboot30&blogentry_id=4294

Posted by: HizEntinY | Thursday, December 22, 2011 at 04:04 AM

Want to make your site was high in the rankings of pozycjonowanie web pages? Would you like to be able to find it, anyone who searches on the password associated with the subject? Perhaps you should pozycjonowanie consider the positioning of the page? Positioning is to place it high in the search results by applying some kind of treatment.

Until recently, the easiest way was to place positioning in the text, pozycjonowanie reproduced on the site, key words and phrases. They were and are easy to find for so-called. search engine robots.

The words most frequently isolated from the text by using bold or pozycjonowanie underline in order to become even more apparent. So when the password is entered in the search and is well exposed on the side of it pozycjonowanie stron there is a good chance that this party will be somewhere on the initial list of search results. Positioning is a method for which pozycjonowanie stron the importance of internal links, optimizing content, and more.

Page must be, because noticed by search engines, but also by people. Must encourage the content and appearance to open it and visit.

Positioning allows, admittedly its visibility, but it still does not mean that a short text from a page appears with a sophisticated phrase, pozycjonowanie it will be interesting enough and clear that you are looking for news on the topic just open this link.

Using search engines is very helpful in gaining information for each user so it is important that, in the first pages of results, they displayed the most reliable, competent and reliable.

Posted by: Pozycj-W76 | Saturday, December 24, 2011 at 03:48 AM

dm2 ugg store rm7 http://our.windowfarms.org/2011/12/22/cheap-ugg-boots-uk/

Posted by: Onemnange | Sunday, December 25, 2011 at 03:11 AM

vqvzx chicago blackhawks jersey szdlz http://uggs-on-sale-such-online-shop.wallinside.com/post-892873.html

Posted by: Nowoneginofes | Monday, December 26, 2011 at 03:09 AM

ADFPMRLPQO canada goose DXUQJWQFXN http://canadagoosecoats.webnode.com/home/

Posted by: dodyMentAnymn | Monday, December 26, 2011 at 03:16 AM

ZXNPXTQSPB canada goose outlet IIQKGZVFUN http://canadagoose00.blogcenter.de/2011/12/23/canada-goosea-title-that-is-most-certainly-respected-amongst-winter-sport-lovers/

Posted by: dodyMentAnymn | Monday, December 26, 2011 at 03:51 AM

Думается, если долго стараться, даже самую сложную мысль можно так подробно раскрыть

Posted by: hroniki | Tuesday, December 27, 2011 at 03:13 AM

oSljKavCq ugg boots outlet vYlsWwdAx http://www.networked-politics.info/?p=27876 fUieDfjIy uggs rDalWyiUj http://kittenplay.biz/2011/12/26/uggs-outlet-were-received-by-many-people/

Posted by: Reurlerwory | Tuesday, December 27, 2011 at 03:34 AM

gRfqOndBg cheap uggs hZjiOcnUv http://ffdashagua.honmag.com/2011/12/26/ugg-boots-cheap-kid-safety/ iExfFpnUq uggs on sale bEqxSspWf http://ffdashagua.blog.labolsa.com/2011/12/26/ugg-boots-cheap-sale/

Posted by: Reurlerwory | Tuesday, December 27, 2011 at 04:02 AM

YCVBVTYEUH uggs on sale ERITJSCDYN http://protopat37.lache-tes.com/p79349/2011-12-26-guide-to-opting-for-low-cost-ugg-boots-uk.html PNQGMMQXZH ugg boots uk COAOJILFZQ http://ffdashagua.blog.labolsa.com/2011/12/26/real-ugg-boots-for-cheap/

Posted by: dodyMentAnymn | Tuesday, December 27, 2011 at 04:04 AM

TFVYTEOIXN uggs sale BSTFQIXECM http://tuqonxuiameisumner.bandvista.com/?post_id=123244 NKIMRALSYD ugg boots outlet QJODCJWYTQ http://www.short-articles.net/ugg-discount-boots-surprise-of-you/

Posted by: dodyMentAnymn | Tuesday, December 27, 2011 at 04:07 AM

online pharmacy in mexico Book internet pharmacy hair loss glaucoma Luvox cod prescriptions online,cash on delivery pain or difficulty passing urine in UK.Buy online cheap Frankreich C,o,d No prescription heart failure or circulation problems Luvox Cheap online severe or watery diarrhea Uy for cash on delivery.Cheap with no prescription buy naltrexone medicines,foods Motilium Find online Tablets Tucson cod no prescription +FREE Pills

buy eriacta buy eriacta buy female viagra without buy female viagra without buy flagyl buy flagyl

Posted by: online pharmacy without prescriptions reviews | Thursday, December 29, 2011 at 03:21 AM

Hello.This article was really remarkable, especially because I was searching for thoughts on this matter last Tuesday.

buy Priligy

Posted by: buy Accutane | Friday, December 30, 2011 at 04:00 AM