The perplexing question for businesses is "how can we make money from free?" Most view the social web as a playground, a place where people connect, converse and businesses view the economic game as purely one of advertising. The fuel for business is people and money but how can a business earn money from the social web?
Dan Greenfield writes: Chris Anderson's Wired Magazine cover story: "Free! Why $0.00 is the Future of Business." To Anderson, "the rise of 'freeconomics' is being driven by the underlying technologies that power the Web...Which is to say, the trend lines that determine the cost of doing business online all point the same way: to zero."
"In an economy where abundance is valued over scarcity, sharing and collaborating are replacing charging and mandating. These new rules of the game are redefining how we do our jobs, charge customers and make money."
Copies Are Free
Kevin Kelly writes: "The internet is a copy machine. At its most foundational level, it copies every action, every character, every thought we make while we ride upon it. In order to send a message from one corner of the internet to another, the protocols of communication demand that the whole message be copied along the way several times. IT companies make a lot of money selling equipment that facilitates this ceaseless copying. Every bit of data ever produced on any computer is copied somewhere. The digital economy is thus run on a river of copies. Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free."
Yet the previous round of wealth in this economy was built on selling precious copies, so the free flow of free copies tends to undermine the established order. If reproductions of our best efforts are free, how can we keep going? To put it simply, how does one make money selling free copies?
In short, the money in this networked economy does not follow the path of the copies. Rather it follows the path of attention, and attention has its own circuits.
I have said nothing about advertising. Ads are widely regarded as the solution, almost the ONLY solution, to the paradox of the free. Most of the suggested solutions I've seen for overcoming the free involve some measure of advertising. I think ads are only one of the paths that attention takes, and in the long-run, they will only be part of the new ways money is made selling the free.
Well, What Will Create the Earnings?
Kevin Kelly continues: "There are a number of qualities that can't be copied. Consider "trust." Trust cannot be copied. You can't purchase it. Trust must be earned, over time. It cannot be downloaded. Or faked. Or counterfeited (at least for long). If everything else is equal, you'll always prefer to deal with someone you can trust. So trust is an intangible that has increasing value in a copy saturated world."
"Success in the free-copy world is not derived from the skills of distribution since the Great Copy Machine in the Sky takes care of that. Nor are legal skills surrounding Intellectual Property and Copyright very useful anymore. Nor are the skills of hoarding and scarcity. Rather, there are eight generatives which demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can't be replicated with a click of the mouse."
The new rules of the business game are being set by the freedom of the conversational web. The new rules are based on the foundation of quality relations with people; customers, suppliers, employees, shareholders etc. The conversations are free but the impact of these conversation can either fuel earnings or destroy them. The art of making money from free is hidden in the art of conversations, the hearts and minds of people and capturing peoples attention and subsequently their purchase decisions.
The old way was simply capturing our attention with tricks of the trade. The new way is based on the rules of The Relationship Economy.
What say you?