Tuesday’s post was about the increasing use of ‘free’ as a business model. No less a company than Google is built on ‘free.’ So are Craigslist and Facebook and Flickr.
And free is coming on like a lion.
AOL used to be primarily a subscription-based service. But every year their subscriber base shrinks. Nowadays, as a free portal, AOL.com is the fourth most-visited Web property. The mighty Wall Street Journal’s online version had a subscription model. But Rupert Murdoch, who recently purchased the Journal, announced that it will soon be largely free. It will no doubt grow as a result.
As Chris Anderson writes in his cover story, “Free! Why $0.00 Is the Future of Business,” in the March 2008 Wired magazine:
“People think demand is elastic and that volume falls in a straight line as price rises, but the truth is that zero is one market and any other price is another. In many cases, that's the difference between a great market and none at all.”
“The huge psychological gap between "almost zero" and "zero" is why micropayments failed. It's why Google doesn't show up on your credit card. It's
why modern Web companies don't charge their users anything. And it's why Yahoo
gives away disk drive space. The question of infinite storage was not if but when. The winners made their stuff free first.”
Fair enough for the for-profit folks. But as I asked in Tuesday’s post, “is free sustainable or even possible for organizations that are already not-for-profit?”
Many of you thought for a moment and answered, “Well, yeah. In fundraising nonprofits use ‘free’ all the time. And it works great.”
I’ve got a drawer full of proof at home.
In fact, notwithstanding business cases like Gillette (where since the company’s founding in 1903 Gillette razor handles typically cost a pittance, but the blades are a pretty penny) nonprofits have been using the concept of free longer and with greater success than most for-profits. ‘Free’ is baked deeper into the DNA of nonprofits than it is in any flavor-of- the-month tech company.
- In my desk at home I have a drawer full of free-to-me address labels from perhaps a half-dozen nonprofits. I’ve gotten pens, bumper stickers, key fobs, notepads, and more. Nonprofits send out those giveaways because experience clearly demonstrates that an envelope with something free in it generates more than does an empty envelope.
- In the United States the public radio and television are both supported by periodic public appeals that draw heavily on premiums. Donations in a certain range come with valuable items like books, tapes, meals, lodging stays, events with celebrities, and more. The telethon producing charities do much the same, especially at the local level.
- Paper icons, usually priced at $1 in North America, sometimes come with price-saving coupons. And so the purchase price might bring $5 or more dollars in coupon savings. Some charities do much the same with calendars.
- A few months back I went to a free performance from best-selling author and humorist Andy Andrews that was sponsored by a nonprofit as a 'friend-raiser.' (He was dynamite, BTW. The best 90 minutes I've spent in the last year). In April Andrews will return to a larger venue for another friend-raiser, also free.
Nonprofits understand better than most companies that ‘free’ doesn’t mean ‘no expense.’ Nonprofits know that in their fundraising they while they can and should give stuff things away to boost their fundraising. (Reread the material under the heading ‘Taxonomy of Free’ in Anderson's Wired article for a refresher on how to pay for and think about ‘free.’)
And finally, nonprofits understand that among the many things they can give away free the most important may be the feeling that their supporters are doing something good.
Labels: Andy Andrews, AOL, Chris Anderson, Craigslist, Facebook, Flickr, Gillette, Google, Rupert Murdoch, Wall Street Journal, Wired