An old proverb suggests that when you have given nothing, ask for nothing.
But the same cannot be said for information and software which are now commonly offered to web surfers at no cost.
But the same cannot be said for information and software which are now commonly offered to web surfers at no cost.
It is actually expected that media organisations provide news via their website. The Age provides virtually identical content to their website and it is free!
But how does this generate cash flow? While a website may affect newspaper sales, the internet is developing into a three-way market, with advertisers seeking to promote. Hence, The Age would recuperate lost newspaper sales (and some more) with money from advertisers.
A number of other business models are used to encourage a paying audience. Many software companies offer free sample versions, only to charge full price for the full version. ‘Freemium’ works because the cost of serving the majority, who opt for the sample version, is close to zero. Other websites use cross-subsidies where certain products are offered cheaply in the expectation that the consumer will buy something for full price.
But how does this generate cash flow? While a website may affect newspaper sales, the internet is developing into a three-way market, with advertisers seeking to promote. Hence, The Age would recuperate lost newspaper sales (and some more) with money from advertisers.
A number of other business models are used to encourage a paying audience. Many software companies offer free sample versions, only to charge full price for the full version. ‘Freemium’ works because the cost of serving the majority, who opt for the sample version, is close to zero. Other websites use cross-subsidies where certain products are offered cheaply in the expectation that the consumer will buy something for full price.
In an interesting experiment in 2007, Radiohead offered their album ‘In Rainbows’ for a cost determined by the purchaser. While this affected earnings, it was good publicity and may have contributed to concert and merchandise sales.
Check out this Reuters report on Radiohead’s campaign. Convinced yet?
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