free

open-source model

1. build a community around free information and advice on a particular topic

2. with that community‘s help, design some products that people want, and return the favor

   by making the products free in raw form

3. let those with more money than time/skill/risk-tolerance buy the more polished version

   of those products (that may turn out to be almost everyone)

4. do it again and again, building a 40 percent profit margin into the products to pay the

   bills

abundance thinking

1. if it’s digital, sooner or later it’s going to be free

2. atoms would like to be free, too, but they’re not so pushy about it

3. you can't stop free

4. you can make money from free

5. redefine your market

6. round down

7. sooner or later you will compete with free

8. embrace waste

9. free makes other things more valuable

10. manage for abundance, not scarcity

give away 95% of your product to sell 5%

business models

direct cross-subsidies

• give away services, sell products (Apple Store Genius Bar tech support)

• give away products, sell services (free gifts when you open a bank account)

• give away software, sell hardware (IBM and HP‘s Linux offerings)

• Give away hardware, sell software (the video game console)

• give away cell phones, sell minutes of talk time (many carriers)

• give away talk time, sell cell phones (many of the same carriers, with free nights and weekend plans)

• give away the show, sell the drinks (strip clubs)

• give away the drinks, sell the show (casinos)

• free with purchase (retailer loss leaders)

• buy one, get one free (supermarkets)

• free gift inside (cereal)

• free shipping for orders over $25 (Amazon)

• free samples (everything from gift boxes for new mothers to supermarket tasters)

• free trials (magazine subscriptions)

• free parking (malls)

• free condiments (restaurants)

third-party or two-sided markets

• give away content, sell access to the audience (ad-supported media)

• give away credit cards without a fee, charge merchants a transaction fee

• give away scientific articles, charge authors to publish them (Public Library of Science)

• give away document readers, sell document writers (Adobe)

• give women free admission, charge men (bars)

• give children free admission, charge adults (museums)

• give away listings, sell premium search (Match.com)

• sell listings, give away search (Craigslist New York Housing)

• give away travel services, get a cut of rental car and hotel reservations (Travelocity)

• charge sellers to be stocked in a store, let people shop for free (slotting fees in supermarkets)

• give away house listings, sell mortgages (Zillow)

• give away content, sell information about the consumers (Practice Fusion)

• give away content, make money by referring people to retailers (Amazon Associates)

• give away content, sell stuff (Slashdot/ThinkGeek)

• give away content, charge advertisers to be featured in it (product placement)

• give away resume listings, charge for power search (LinkedIn)

• give away content and data to consumers, charge companies to access it through an API (eBay‘s deal with high-volume analytics firms such as Terapak)

• give away limited green house plans, charge builders and contractors to be listed as green resources (freeGreen.com)

freemium

• give away basic information, sell richer information in easier-to-use form (BoxOfficeMojo)

• give away generic management advice, sell customized management advice (McKinsey and the McKinsey Journal)

• give away federal tax software, sell state (TurboTax)

• give away low-quality MP3s, sell high-quality box sets (Radiohead)

• give away Web content, sell printed content (everything from magazines to books)

• charge buyers to shop in a store with lower prices; infrequent shoppers subsidize frequent ones (membership chains such as Costco)

• give away online games, charge a subscription to do more in the game (Club Penguin)

• give away business directory listings, charge businesses to claim and enhance their own listings (Brownbook)

• give away demo software, charge for the full version (most video games, which will allow you to play the first few levels to see if it‘s for you)

• give away computer-to-computer calls, sell computer-to-phone calls (Skype)

• give away free photo-sharing services, charge for additional storage space (Flickr)

• give away basic software, sell more features (Apple QuickTime)

• give away ad-supported service, sell the ability to remove the ads (Ning)

• give away snippets, sell books (publishers who use Google Book Search)

• give away virtual tourism, sell virtual land (Second Life)

• give away a music game, sell music tracks (Tap Tap Revolution)

prosumers

• perform unpaid work through “third jobs” and self-service activities

• buy capital goods from the money economy

• lend their tools and capital to users in the money economy - another dish of free lunch

• improve the housing stock

• "marketize" products, services and skills

• "de-marketize" products or services

• create values as volunteers

• provide valuable free information to for-profit companies

• increase the power of consumers in the money economy

• accelerate innovation

• rapidly create knowledge, disseminate it and store it in the cybersphere for use in the knowledge-based economy

• raise children and reproduce the labor force