Building on Chris Anderson’s Free: What Can You Charge For?

[Posted by Bobby Tulsiani]

Chris Anderson has penned an article for the Wall Street Journal today, “The Economics of Giving It Away.” Anderson, who was the author of the Long Tail, has been a popular voice in tech circles promoting the virtues of “Freemium” business models. In today’s article, Anderson acknowledges that the macro economic conditions have put more pressure on the paid side (the “mium”) of the model than ever before:

“But it does mean that Free is not enough. It also has to be matched with Paid… Free may be the best price, but it can't be the only one.”

Last winter, my colleague Sarah Rotman Epps and I both wrote about the prospects and forecasts for paid content online. In my report, I wanted to dive in and explore what value propositions people actually will pay a “premium” for. After all, people have been paying a premium price for goods for years and we can learn from that. Coke and Pepsi don’t sell sugar water, they sell “refreshment.” The local gas station dosen’t sell groceries, it sells “convenience."

We know Match.com isn’t selling subscriptions, it is selling “love” and we know The Ladders.com isn’t selling job listings; it is selling “your career”. Both of those seem like things people will pay for - online or offline. In my report, I developed a framework mapping such value propositions to paid products that I think may be useful to many of our clients.  As always, I would welcome the opportunity to hear case studies where you have developed such value propositions or feedback on our current framework.