There are whole groups of people who have embraced the idea of ‘free’…none more so than personal finance bloggers and their followers.

I subscribe to three blogs (Money Saving Mom, Northern Cheapskate, and Bargain Briana) if only for their tips on getting free stuff (iced mochas at McDonalds and free Redbox rental on Mondays, for examples!).

And anytime I put the word ‘free’ in a blog post, hits go way up. And I’m pretty sure that other bloggers have the same experience.

In the Boston Globe (June 28, 2009) was an interesting article called ‘The Future Of Free’. Chris Anderson, editor-in-chief of Wired magazine, recently wrote a book called “Free: The Future of a Radical Price”. The premise:

“For many people, music is now free, along with news, movies, video games, and the software to help with everyday tasks. In ways it was not before, it’s free today to look for jobs, apartments, friends, roommates, and even romance. For the time being at least, the forces of free are upsetting not only traditional business models, but long-held assumptions about what we have to pay for, and when and how.”

Some people think this is hooey:

“Overall I would say he’s pointing to a trend that is real, though also a trend that is by no means new,” says Kartik Hosanagar, an associate professor at the University of Pennsylvania’s Wharton School … “This notion that the future is free for just about everything around us, or even the majority of things around us, is just an oversimplification.”

But what’s interesting is the success some have had with this business model:

“… a young musician named Derek Webb who gave away his album for free to downloaders as long as they left their e-mail addresses. Webb used the 80,000 e-mail addresses to build a mailing list, ensuring that his concerts are sold out and selling far more merchandise than he otherwise would have.”

And some websites offer ‘basic’ services for free but charge a higher amount for premium services (a ‘freemium’, if I am using the term correctly).

It’s also interesting that recently I’ve noticed that some companies have had to change their usual ‘freeness’. Here’s part of an email I got as a Pandora subscriber from the president of the company:

“..While we did the best we could to lower the rates, we are going to have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the web. Because we have to pay royalty fees per song and per listener, it makes very heavy listeners hard to support on advertising alone…We hate the idea of capping anyone’s usage, so we’ve been working to devise an alternative for listeners like you. We’ve come up with two solutions and we hope that one of them will work for you:

Your first option is to continue listening just as you have been and, if and when you reach the 40 hour limit in a given month, to pay just $0.99 for unlimited listening for the rest of that month…Your second option is to upgrade to our premium version called Pandora One…”

‘Freemium’ seems to be the waty to make some money while offering some free online content. Making money off free? Personally I am a little skeptical…

What do you think of the free business model?

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