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The Business of Free
Gbenga Kogbe
Something wrong here!
“Business is Booming”
Tony Rabbits who runs the Four Crosses in Cannock
Free v1
• Buy 2 get 1 free
• Free cell phone
• Media model (advertiser pays)
Free v2
• Digital economics
• World of zero (marginal) cost
• Access to global community
Disruptive!
“If we’re successful, we would fundamentally change the operating system market,”
Mark Shuttleworth, the lead evangelist for Ubuntu Linux
Where is the freedom?
• Data freedom
• Freedom of tools
• Interface freedom
How much is enough?
Income vs. Impact
• For profit
• Non-profit
• Not only for profit
Focused or Hybrid?Business Models
• Freemium• Value add• Platform• Segmentation• Third party “partnering”
Freemium
Up-sell model× 0.1% of 10,000 = 100.1% of 100,000,000 = 100,000
E.g.
Some pay for an upgraded service!
Value add
• Value add (what else can we provide)• Services (OS Model)
• Reputation• Complements• Customisation• Consulting…
E.g.
pay for added value
Platform Play
Ecosystem of businesses• Help others make money• A small/big slice of the pie
E.g.
Figure out how to get a cut of value created
Segmentation
• segregation model– Corporate/Personal– Industry groups– Academia/Business
E.g. craigslist,
Craigslist founder Craig Newmark with CEO Jim Buckmaster
Charity Model
Donate!• Active Fundraising• Volunteer based
E.g.
Paid for social value
Third Party Funded
• PCs Dell
• Searchers Google
Someone else pays (not only advertisers)! Users pay nothing…
$
$
$
$
Firefox
Ubuntu
Revenues: $30 Million
Market Share Summary
Global: 20%
Europe: 30%
Implications of the New Free
• Business cost structure
• Strategic Alignment
• Challenges of Scale
Free Models
• Freemium – users pay for more
• Value add – users pay for something else
• Platform – paid for delivering ecosystem
• Segmentation – only some users pay
• Third party pays – others pay for users
• Charity – please donate!