On the web, the standard economic model is to give products away for free — from storage to email, music, news, access, and other information. For companies to survive in an economy of free, they have to spin their business models in creative ways, finding profits indirectly, such as through lite/pro versions, cross-subsidies, advertising, or appeals to the attention economy. In the economics of free, writers face particular challenges because their product is information, which is often intangible, and the intangible is almost always free.
Experimenting with Free
My sister is up from Florida visiting this week, and we’ve been talking about iPhone apps, because her husband already created a couple apps, and their million-dollar app idea is just around the corner. My brother-in-law Sean’s first iPhone app, Box of Socks, sold for 99 cents, like most others. Not seeing much profit, he decided to release a lite, single-level version version for free. During the first week, he saw a 50% increase in sales, but after the week, sales returned to normal.
His other application, Tap Dots, ran a similar course. After three months, the application had 400 downloads. Discouraged by the lack of success, he decided to make the entire application free. As a free app, he had 3,000 downloads in four days.
One attempt in making the application free, Sean explained, was to bump up the product’s visibility. If you can get in the top 25 most popular downloads, the sales of your app take off dramatically, because people look for new apps in this top 25 list. The more people download your app, the more visibility you receive, and the more visibility you receive, the more people download your app — the process feeds on itself and pushes you upward. The free giveaway is just one technique to try to move into that hyper-downloaded space. Read the rest of this entry »