“Free” is it the Perfect Business Model?
One of my first online ventures involved information services. I was already engaged in the information services market, we just did most of our advertising in the nationals section of the Thrifty Nickel and phone number tear-offs on payphones.
We entered the online market selling our services for a slightly increased price, advertised online using Overture an early search engine PPC that eventually became Yahoo Search. Things were moving along great, we saw an immediate increase in responses until, someone copied our program and was offering the same service (and even our exact service list mind you). It was before the DMCA act was around and it was too expensive to go the lawyer route.
After a fruitless game of cat-mouse in bidding wars, we decided the only way to combat this guy was to give away our services absolutely free, rely on affiliate commissions from e-mail subscriptions and drive him out of the market.
Did we fail, or was free a key part of our eventual turn-around strategy?
What is the Purpose of Free?
Being free doesn’t guarantee you online success; however it has some very attractive aspects seriously worth looking at. Offering free content attracts a larger audience. If you can garner the trust of your visitors, you gain access to them in a more direct method example through an e-mail newsletter or direct mail.
A Free Model
For free to work you have to have a constant stream of new readers, ample ad inventory space and advertisers willing to fill it. Many publishers rely on services like AdSense, Bidvertiser and thousands of others but the real money is in a direct relationship with the advertiser. A free model also works if you are able to “sell” something later on.
So is Free the Perfect Business Model?
I would say “maybe”. Despite apparent current profitability of select free models, the rush to find a micro-payment model for some if not all content of some publishers is just too enticing to ignore. That along with increased operating and development costs pushes many publishers and website operators to at least explore the options as they are developed.
Oh, and that guy who copied our program eventually gave up competing directly with us, so for us it was the beginning of what is today the Blue Bayou Network of web properties.