The Meaning of a Free Launch.

I’ve been interested in the concept of “free at the point of use” for a long time. One of the things about the key tools you and I use on a daily basis are the “free at the point of entry”value propositions. If those tools happen to be good, word of mouth and user feedback tends to drive their uptake.

The internet – It starts global.

Many people have an aversion to “free” considering the concept in a very one dimensional way. It’s often hard to deal with binary thinkers anyway, but the word “free” tends to take the conversation into realms of insanity very quickly.  Weapons grade socialism and anarchy simultaneously according to my capitalist critics.

Free at the point of use doesn’t mean that something has no value. Think of public roads and the multiplicity of ways that money is clawed back to  cover their costs, think of those public private partnerships and toll road concession deals, then think about all those disused B roads and dirt tracks. They all carry traffic, some more than others.  Roads have their own constraints, linkages, patterns of use and functionality. The internet in some ways mirrors this physical landscape.

Free is not contrasted directly with paid. The concepts are usage, utility, functionality… product uptake, customer persona and use cases, time on site, usage patterns, up-sell, cross selling, developing packages, developing user types, increasing/decreasing scope, developing a product, scaling a product, using various points of the life cycle of a product, increasing user base, widening development feedback, adding functionality, using the native power of the internet, running A/B tests, adding payment gateways, developing online products, developing sites and distribution networks, running e-commerce, loss leaders and many more potential options. Free does not mean limited, often it is quite the reverse.

We (internet users) are very much aware that the major social networks harvest data and sell it as a commercial product, but that is only one use. This profiling element is well understood and developed. There is an entire industry of targeting, analytics and back-end tools devoted to this end.

There can be win-wins and emergent functionalities. Think of tools like Wikipedia, then imagine that anyone would seriously consider this unsanitary hodge podge of opinion and fact a competitor for the 244 year old Encyclopedia Britannica. It seemed nonsensical till it put the print version out of business.  Then people rewrote the headline (post hoc).

Let’s look beyond the headline. Many software solutions work on the premise of freemium/premium. It’s a valid way of generating user feedback and offering enough functionality to gain customers, developing a learning pattern for the tool and to later implement various versions, upgrades, changes and pivots. There is plenty of business value in all of these propositions.

I used Pinterest for years and thought it very good, it’s recent IPO was heavily oversubscribed. Pinterest has garnered it’s user-base through utility and functionality.  There have probably been many paid versions of a somewhat similar product over the years. Free doesn’t mean cheap, nor does it correlate to low quality.

The company can justifiably ask what are we getting in return?

One of the other things to look at is not the principle of “free” as a unitary concept. Quite often a tool is easy to build in the online world (like a beta version) and distribute to customers (again I’m thinking software), when the developer wants to make money from his or her product there is means of showing investors the validity of the tool or process and demonstrating users and use cases. In many of these situations you are leveraging the power of cheap distribution to show how a scaled version of the product will work (think of TV scripts as initially a draft, the book, then screenplays and later fully realized versions with actors and stage sets – it is a widening of the distribution channels). While the initial draft wouldn’t earn much, later incarnations benefit from many distinct influences which emerge at each new level.

People become very sniffy at the idea of giving their work away for free, yet that is not quite the point. The point is retaining the ownership of key components of that work and developing it with time. The point is not to equate direct financial reward with effort in a binary manner.  Everyone has heard how George Lucas held out for the merchandise marketing rights on Star Wars or how a broke Sly Stallone wouldn’t accept not playing the lead in Rocky.

Value is often in the intangibles.

Pricing is not a rational process. some things which are very valuable are disregarded and many things of low value have achieved widespread distribution, I’m thinking fidget spinner here.

I’ve been preaching the value of Linux for years(perceived switching costs – see mobile network operators for more on this topic). Most of my family members and friends still use Microsoft products. My kids can’t tell the difference, using both platforms without distinction.  Their pattern of use is different, they want to watch cartoons on YouTube in a browser. It’s three levels of abstraction above the question of which one is better.

It’s also a better perceptive on exactly what part of the apparatus holds monetary value; (which is the ability of advertisers to make my children force me into buying decisions, which they do based on the contextualized content they see). It ultimately doesn’t matter to advertisers which OS carries the payload.

Many of the tools I use for the distribution of content go through a similar developmental cycle. If the tools are good they get snapped up by a major brand and turned into a paid version with the original free version becoming “a low monthly payment of…” What this does is to stop the evolution of the original product and remove the “free user” base. You’re actually strangling the golden goose.

The developer/bigger brand will say that he or she has to add a payment proposition to make the continued development of the product viable. This is a complex question in it’s own right.  It often has less to do with the product than the fact that there is a critical point when a hobby project becomes a business project. At that juncture people seek money.  As a result of seeking money, staff or new offices, a level of cash is needed to sustain the “enterprise. It’s a nuanced change in circumstances, but the cash has to come from somewhere. The first port of call is obviously the customers or users.

I know the money men will point to the “forcing them to upgrade” argument, but my gut tells me it is facile and disingenuous from the product development perspective, but then money men are not developers. I’d argue that they’ll never tell you that the keeping the original functions and developing a slightly more advanced secondary tier based around the key functions that users want was considered, they only see “free and paid” in binary terms, not as iterations or distribution stages.

 

What the money men don’t see is that the initial user base becomes”brand ambassador” for the product. If a tool is incredible it will spawn a host of copycats, so the objective is to iterate and develop as quickly as possible. The information and feedback has significant monetary value on the back end, although it is easily disregarded.  If you’re smart you’ll make use of an engaged community instead of short selling them.

There is a lot to be said on this topic, but I feel that I’ve opened it sufficiently for you to look at options and ideas. Another thing to look at is exactly how much of the software you use on a daily basis is free or freemium. The percentage is too large to dismiss. In fact I’d go as far as to say that most people only use “free at the point of use” software.

Think about that a minute…when the highest percentage of the tools you use are not paid for directly by a single user-one time fee. There is something about digital distribution (multiplicity and exact copies) that makes this so.

Think also about how software develops value. It develops through the combined utility and word of mouth from satisfied users, very rarely does software have a spot on the Superbowl, yet the influence of great software is ubiquitous.

I’m not saying good software = free software. Photoshop is a classic example (it’s very good, highly polished, specific use software – for a quality conscious buying group).

If you want user feedback, maybe let people use it for free, so that you learn how (and what) to sell later.

 

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