What “Free” Really Means On The Web
This past weekend, I went with a friend to Portland, Maine to see a free concert. I’d never really heard of the band, but it was their reunion show after splitting up five years ago. Apparently they’re a very big deal in Maine, and it was heavily attended.
When the concert started, we noticed that a lot of people were paying no attention to the band whatsoever. Instead, they had their backs to the stage and were just talking to each other. My friend looked very annoyed and said to me: “Why would these people even show up if they don’t want to pay attention?” My easy answer: “Because it’s free.”
Which, like all things, made me think of what this means on the web. I know, I know, I have a one track mind. What can I say?
The different types of “free”
When something is offered for “free” online, the term is usually not absolute. The definition of free in the case of, say, a web based service means the user does not have to actually pay anything to the service provider. However, there are usually some restrictions. A few come to mind:
- Completely Free- Though rare, these do exist. These include services that have no ads whatsoever, and require no information from the user.
- Ad supported- This is a big one, and I’ll get more into the ad-supported free model in a bit. These sites require no payment from users, but instead make their money from ads.
- Registration Required- These are sites and apps only require the user to register for use.
- Limited Time Only- Some services opt to allow users to have a 30-day trial period before they need to buy.
- Free, but limited- A good example here would be flickr: anyone can use flickr to store images for free, but if the user exceeds an album or space quota, they will need to purchase a “pro” account for a nominal fee.
- Free with purchase- Sometimes a book publisher will publish additional content on the web that is available only to those who have purchased the book.
- A combination of the above- Many sites and web services will employ a combination of the above methods.
Free-to-pay
As noted above, some of the things that are “free” online also have a paid equivalent. Pownce and flickr both have “Pro” accounts. This appeals to users that use the services extensively, and want no usage limitations. Aside from the broader usage potential, there is a certain status that comes with having a “pro” account (that’s another post entirely).
Though having a pro version of a free app does generate revenue, pro accounts only represent a small percentage of users, thus making the free-to-pay model more of a supplemental income stream. Most online services cannot survive from pro account revenue alone.
Registration Required
When a content site requires users to register, they do so for a few reasons. First, it gives the site operator user information they can then present to advertisers to justify ad spend. Requiring registration also gives the site a point of contact, and a chance to send things like email updates to readers, in turn driving repeat traffic back to the site.
Limited Time Only
This is a very effective way to get users to try out a service, as there is a perception of value. Users get a chance to try out something that normally would cost money. They can judge for themselves whether there is enough value in the service to pay for it.
The Drawbacks of “Free”
Offering a service for free (any flavor) is obviously a great way to appeal to the broadest possible user base, and it’s an effective way to acquire users. [I know- groundbreaking research there, right?] However, there are some significant drawbacks to offering something for nothing:
1) No Investment, No Ownership- When something is free, it is perceived to have less value than something that costs money. Because of this, since the user has made no monetary investment, it is easy to abandon the free product or service.
2) It’s Easy To Be Critical of Something That’s Free- If something is free, everyone has access to it. In today’s web world, everyone is a critic. It’s very easy to set up a blog and smash a product (ahem). Completely unrestricted access can be great, but it can be equivalent to shouting “Hey everyone: Come over here and judge us!!!”
On the other hand, it’s much more difficult to be critical of something you’ve paid for. In fact, a fellow miner put it best yesterday:
“You wouldn’t bash something you paid for, because then you’d look like a dumbass.” – Michelle Heath 7/31/07
That’s a good point. When you pay for something, you’ve made a judgment call. And it’s a reflection of your taste. For example, I just bought a Nissan Versa a couple of months ago. If I heard someone bashing it, I’d immediately feel defensive, since I have one. Being critical of something I’ve invested time in money in is roughly equivalent to calling me an idiot.
3) Once Free, You’re Stuck- When a company offers a service for free, they’ve set an expectation. They’ve implicitly stated “Hey, you can use this thing for nothing. We’re taking care of our bills another way.”
But what if their business changes? How would they justify charging for something that they previously offered for free? Now that’s a tough one. Good luck with that.
4) When you offer something for free, you become an easy target-Â When something is free, others want to copy what you’re offering. Think of myspace- when the service started gaining popularity, thousands of clones appeared on the scene hoping to duplicate myspace’s success.
5) User Loyalty Is Fragile- When users pay for a service, they’re locked in. This point is much better demonstrated with an example, and, would you look at that? I just happen to have an example. Convenient!
Dating sites cost money. Think of the recent onslaught of TV ads for Match.com and eHarmony.com. These are two direct competitors that are vying for the same user base. When someone signs up for one over the other, their decision is both an acceptance of one service and a rejection of the other.
Being a user of one service means you’re not a user of the other. It wouldn’t make sense to belong to both (just go with it). But, if both services were free, users wouldn’t need to choose one over the other. Taking away the purchase decision takes away any reason to remain loyal to one.
Now think of myspace and facebook. There’s no compelling reason (other than time) to just belong to one. There’s no loyalty in free.
Thoughts?
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