Free and Freemium
Stefan Peter Roostwitter.com/spr2
Stefan Peter Roostwitter.com/spr2
economist, web strategist, online business consultant, proud music, entrepreneur,
speaker, music publisher, brainfood specialist...whatever
Please note: These slides were used in my talk at All2gether Now conference, Berlin
2010 as outline, so the explanation/context is unfortunately missing, if you did not
attend!
www.a-2-n.de
Why Freemium?
Why giving away your productFOR FREE?
Digital Goods:
Only First Copy CostMarginal Cost=0
No Rivalry in consumptionExclusion of free riders difficult
From Scarcity Economy
toAbundance Economy
Attention Economy:
Wealth of Information
=Poverty of Attention
(and a need to allocate that attention)
Attention Economy:
Money follows Attention
Digital Goods:
Value determined AFTER consumption!
Assumption 1:You can only sell to people who see your
value!
Assumption 2:more new content than everThe largest back catalogue
in history
Just one click away!(illegally&legally)
This is a permanent change!
I'm sorry ;)
Well, not really sorry!
Still true:Lowest possible
price =
Marginal Cost of an additional unit
Free=
Maximum Reach
Assumption 3:
If something can be provided for free
someone will do it!
Information wants to be free
=> there will be free copies anyway
Music Industry was the Canary in the
coal mine => video, news,
books etc. will be next
This is not a problem,
if you sell something, that cannot be
copied!
Simple Model:x*C*S=Revenue
x=Reach/AttentionC=Conversion Rate
S=Average Revenue/Fan
x*C*S=Revenue
Attention you generate (paid)
through sharing (free)Social Recommendation (free)
Derived (fan) Content (free)
x*C*S=Revenue
Conversion Rate Brand
EmotionLoyalty
Artist History...
x*C*S=Revenue
Average Revenue/Fan Direct Relationship
1000 Fan ModelProduct Diversity
Recurring PaymentsRoyalties through Fan Activity
Mike Masnick:Connect with Fans
+ Reason to Buy = Artist Revenue
What are the building blocks for a business
model?
Sunscreen Song...(Baz Luhrmann)
If I could offer you only one tip for the future, freemium would be it. The long term benefits of freemium have been proved by scientists, whereas the rest of my
advice has no basis more reliable than my own meanderingExperience…
I will dispense this advice now.
Use many different blocks to a well-balanced mix!
Free is giving you reach!
Being a Brand gives you
MonopolisticCompetition
Stop thinkingFiles/Units!
Stop thinkingRecords!
Become an IT company!
Access to Music is a software service
Be the center of a Community!
Let fans interact through your service!
Embrace Read/Write Culture!
Everything will be Read/Write
from now on!
Create positive Attention & Viral
Loops!
Create frequent Touch Points for
Fans (not just a release)
Learn to connect with your fans!
Practise!
Have a product on every price level!
casual flattr Live events
NIN-Boxsets Fan-Meet&Greet-
WeekendsCrowd Funding
Be damn good at what you do!
Stand up to the plethora of world class entertainment
one click away!
Music itself is hard to innovate nowadays
Better innovate in Image, Show,
Packaging, Intimacy, Channel
Recorded Music is just the beginning,
not the end
Get used to new thinking:
Audio Only might (eventually) die.
Fotos may die too!
Keep the mystery!
Do not twitter like your buddy next door!
Be better than free! (Kevin Kelly):
1. Immediacy 5. Accessibility
2. Personalization 6. Embodiment
3. Interpretation 7. Patronage
4. Authenticity 8. Findability
Sell something that cannot be copied
Uniqueness – orKeep fan switch cost
in mind
Everything atomizes => Forget Album
=> Track => Elements
Most want access, hardcore fans might want to own sth. of
emotional value
Different levels of involvedness: It's about emotion
More Music Business – less Music Industry
The Time is now – Music for the People,
not Records!
Markets are Conversions!
Read the Cluetrain Manifesto (again)!
What to take What to take home?home?
Most ideas have been tried out before
but:
without easy payment
with strings attached
(DRM)
without instant mobile access
not yet in a lean-back situation
without bandwith for HD Video &
great sound
without social recommendation /
sharing culture
without the internet usage / number of pot. Fans of today
The original Napster may have been the greatest music loving community- remember browsing everyones harddrive- nice instant illegal access- pure music, no strings attached- state of bliss
=> let's try again, but this time legally, with payment for artists involved
Thank you!Get in touch:
Stefan Peter Roostwitter.com/spr2
www.proudmusiclibrary.com www.proudsourcing.de