'Free' and Cause-Related Marketing: Part I

Of a sudden one of the hottest marketing concepts around is ‘free.’ But is free sustainable or even possible for organizations that are already not-for-profit?

I’ll tackle that question in Thursday’s post.

But first, what is ‘free’?

On a recent show, Oprah told her viewers that Suze Orman’s book Women and Money could be downloaded for free from Oprah’s site for 33 hours. During that time 1.1 million copies were downloaded in English and another 19,000 in Spanish.

The graphic above… from TitleZ via the blog longtail.com… shows that sales of the book on Amazon improved dramatically after the giveaway.

That example comes from author Chris Anderson, who says that Free is being driven by the declining costs of digital processing, storage and bandwidth. Anderson, who is the editor of Wired magazine and the author of influential book “The Long Tail,” has another book coming out soon on the business value of giving it away for free.

What other examples are there?
You see the approach used everywhere nowadays. Here’s some examples from the Amsterdam-based outfit Trendwatching.com.
Wait a minute, you say, there’s no free lunch. These things are supported by advertising, or concert-goers, or some such. Well, yes and no. Google is supported by advertising. But unless you live in one nine U.S. cities (out of 450 worldwide) where listings cost anywhere from $10 - $75, Craigslist is completely free to you. It’s not so different with Flickr.com. The average user could exhaust herself with the many free features of Flickr before she would have to pay for their premium service called Flickr Pro.

So how do these outfits survive? They have to meet payroll and pay for paper or Smart cars or photo finishing chemicals, right?

Chris Anderson helpfully provides “a taxonomy of free.” But there’s one item he doesn’t mention. Oftentimes these outfits run very leanly. Craigslist is said to have a staff of less than 25 people, with whom it achieves sales of something more than $15o million a year! (That's $6 million in sales per employee.)


While there have long been giveaways offered as enticements… think of Mrs. Fields cookies, for instance… the ‘bait’ typically is only offered in tiny quantities. By contrast, in the digital age when the incremental cost of processing power and bandwidth and digital storage space approaches zero there’s a whole different kind of economics in place. So, in effect, something like 1 percent of craigslist users pay the
freight for the other 99 percent.

Advertising allows content, services, software, free college textbooks and more
to be free to all.

What’s free is any product meant to persuade you to pay for something else.
Those free CDs in the newspaper from Prince were made possible by the 420,000
paying concert-goers a month later. For that matter, cross-subsides power
over-the-air television in the United States. Advertisers make possible all that
free news and entertainment.
Zero Marginal Cost

“This describes nothing so well as online music,” writes Anderson in his article
in Wired. “Between digital reproduction and peer-to-peer distribution,
the real cost of distributing music has truly hit bottom. This is a case where
the product has become free because of sheer economic gravity, with or without a
business model. That force is so powerful that laws, guilt trips, DRM, and every
other barrier to piracy the labels can think of have failed. Some artists give
away their music online as a way of marketing concerts, merchandise, licensing,
and other paid fare. But others have simply accepted that, for them, music is
not a moneymaking business. It's something they do for other reasons, from fun
to creative expression. Which, of course, has always been true for most
musicians anyway."
Labor Exchange

When you vote on that exquisitely-rendered reply to some question on Yahoo
, you’re creating value or improving the service for the next user.
That’s a labor exchange.
Gift Economy

Wikipedia is part of the gift economy, whereby smarty-pants type people,
motivated by something like altruism or pride, are creating the world’s most
extensive and free encyclopedia. Altruism also motivates freecycle.com, whereby
an object of value can be yours if you’re willing to just haul it away. Some
similar motivation is behind CouchingSurfing, which matches people willing to
put up a stranger for a night or two with people looking for a place to

In Thursday’s post; how to make free work for your nonprofit or client.

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