Friday, October 03, 2008

4 Kinds of business models based on "Free"

4 kinds of business models based on
This was found on Altaide's blog but come originally from David Armano. This shows you out the 4 kinds of business models that you could use with the web 2.0.
  • Paid products subsidizing free products: You provide a free product, which should incentive the customer to purchase another one. For example, you propose some free songs, and hopefully the user will purchase some other ones. This is the vistaprint idea, that provides you free business cards, and expect you to purchase some high quality ones in order to get a benefit.
  • Advertising based model: The revenues come from the advertisement on your site. This is the model of Google, Facebook, or Youtube.
  • Paying people subsidizing free people: The service is free, but in order to get all the different features, you need to access a paid version. The subscribers to this paid version are the one who makes the site profitable. Somehow, they pay for others. This is the system of Viadeo, Remember the Milk among others.
  • The "gift economy": this is a little bit more complicated. You give something for non-monetary rewards. You are expecting a reward, but it could be more complex. I think we can add in this category for example Radiohead or Wikipedia that is financed with donations. You could also benefits out of it by getting in contacts with prospects that later on will become customers.
Here is another scheme explaining the concept found on Chris Anderson's blog.
Four kinds of business models based on free


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