In the Digital Economy how can any company make money while giving its products absolutely free?

Question

In the new economy (digital Economy) how can any company make money (earn profit) while giving its goods & Services absolutely free? Is there any way to do that and what can be different possible revenue streams? What various revenue model and strategy should a company employ?

Answer 1

First, I don't believe the "digital" economy is a "new" economy. I think the basics of supply, demand, basic goods, services, and needs are fairly constant.

Naturally, a business must have a revenue stream (and, it's good practice to consider a "costomer" as any party you are selling something to). That said, you may give your product away to the public, but you must also provide some other service for which you recieve payment.

Two services I can think of are advertising and data collection. With advertising, the product you are giving away will also alert the recipient to the message of the advertiser. This is what free newspapers like the Village Voice do. Alternatively, data collection, is where the person who recieves your product tells you something about themselves that you can sell to a third party.

In the end, I believe that the best business plan is to provide goods and services that people value enough to pay for on thier own. I believe that the model for the internet may become much like cable television, where people pay for the opportunity to watch 1000 channels but each person focuses on some small subset that appeals just to them.

Answer 2

Sorry I don't speak corporate, but I know about the value of charity. Give the product away to a charity, publicize it, and everyone hearing about it will look at the product to see if they might buy it. A heating and cooling corp just gave air conditioners away to the poor, it's been a hot summer. The local news carried the story. I remember the name of the company, I know others will too, even though it has been a few weeks ago. It was Carrier.
Even celebs know this, they all espouse a charity these days,to be perceived in the public's mind as having a warm and fuzzy side, and it might even work for the future, screw up your life, and the public will remember the celeb has a warm and fuzzy side.
The corp I work for goes on the news every year with their charitable project. They are known in the community for it.
Hope this helps.

Answer 3

Oh, it's absolutely profitable. If you can create a lifetime customer, you can afford to give away the first few trials.

The concept is not new. Not all that long ago, you used to see cigarettes on the "end caps" at the register check-out in stores. It's so easy to shoplift from there! Why did cigarette companies do that? To ENCOURAGE shoplifting by teenagers! They knew if the kid was enticed to shoplift a couple of packs easily, they'd get him hooked and he'd be a lifetime customer.

If the digital information you're selling is on a CD-rom that takes 10 cents to manufacture, you're absolutely using a good sales technique to get the customer hooked and then get them to buy all of the upgrades for years.

Apple computer started that years ago. In the early 1980's they GAVE computers to schools. Why? Because the kids and their parents would go out and buy the same models and upgrades. Once you're stuck in Mac, you're probably going to stay with that platform and just upgrade. It's probably what's kept the company in business all these years.

Answer 4

The low end products are absolutely free.

The high end products have a fee.

Look at AOL - they will now give away e-mail, IM and other services in exchange for people paying $25 per month for broadband video access to Katie Couric and others.

Answer 5

I believe some companies do that for a limited time to get people to try their product, rather than spend millions of dollars advertising on tv.

Answer 6

I don't really know but I know who does....

Bill Gates!