Week Four: Money, Money, Money

Anderson, C (2008) ‘Free! Why $0.00 is the future of business’ in Wired Magazine Online- see http://www.wired.com/techbiz/it/magazine/16-03/ff_free

Wilson, F (2008) ‘Make money around free content’ in Wired Magazine Online­- see http://howto.wired.com/wiki/Make_Money_Around_Free_Content

This week we looked at not just one, but two different readings, although the second couldn’t really be classified as a reading- it was a list that labelled all the different ways that websites can make money from their users. I’m not going to go through the list but if you want to see it, just visit the second website written above. It’s interesting stuff…

In the other reading by Anderson, King Gillette is used as an example for the way that business on the internet works. In an effort to get his disposable razor business underway, Gillette basically gave his razors away for free and then charged for the blades. Anderson compared Gillette’s method with the ones commonly used by companies today. He uses examples such as phone companies that give away the mobile phone for free and then put you on an expensive plan to pay for those costs. He also mentions that the internet costs barely anything for the average user (with broadband prices becoming cheaper due to competition, as well as more accessible to people in rural areas) and that it’s practically free. He says, ‘In the digital realm, as we’ve seen, the main feedstocks of the information economy — storage, processing power, and bandwidth — are getting cheaper by the day’.

In some cases, like with Yahoo, users get email with infinite storage capacity for free, and this is becoming more and more common with other websites. As a result, more people use the web and the various sites on it because they know they won’t be charged for it, and the websites can capitalise (through advertising, cross-subsidies, etc) as more and more people visit the page. In his article, Anderson mentions the different ways that website owners can make money from this zero-dollar idea- including giving away free music CDs to promote a concert, or offering free trial demos of computer programs while selling the full version programs to the people that want them. In all, Anderson sums it up nicely when he writes: ‘The winners made their stuff free first’.