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THE FREE ECONOMY
TEAM NUEVE
THERE ARE THINGS WE TAKE
FOR GRANTED
Let’s take Google example…
WHY IS
DOING IT FOR FREE?
HOW ARE
THEY MAKING
MONEY?
FREE STRATEGY
USERS ADVERTISERS
Google Offers a vast collec6on of individuals with dis6nc6ve, known preferences Benefit for adver6sers: • Scale and efficiency • Relevance • PPC • Some freebies, too
TWO-SIDED MARKET
FREE STRATEGY
Ladies night out
THERE IS NOTHING
FREE IN LIFE
FREE ECONOMY
Factors driving the current boom:
1. Decline in the marginal cost of information
• VALUABLE AND NOT-SO VALUABLE INFORMATION
• GROWTH OF THE INTERNET- CREATION OF MASS
AUDIENCES
FREE ECONOMY
Factors driving the current boom:
2. Crowd-sourcing: co-creation of content
• YOUTUBE – WIKIPEDIA – SOCIAL NETWORKS – HUFFINGTON
POST
• NO COST TO PRODUCE THE CONTENT
• FREEBIES STRATEGY
FREE ECONOMY
Factors driving the current boom:
3. Zero is a demand-booster
• PEOPLE PREFER PRODUCTS THAT COST NOTHING TO
THOSE FOR WHICH THEY PAID A FEW CENTS
• CHOCOLATE EXPERIMENT TO MEASURE HOW MUCH
PEOPLE LIKE FREE • ZERO IS AN OFFER THAT’S HARD TO REFUSE: NO
DOWNSIDES
THE PSYCHOLOGY OF FREE
1. Social Norms
2. Trouble Setting Prices
3. Options with no Downside
FREE FREE FREE
FREE IS JUST
ANOTHER PRICING
STRATEGY
Free is a hard price to beat…what’s better
than free?
BUT… Google’s two-sided business isn’t
undefeatable!
IS FREE THE ONLY OPTION?
You can’t fight free with free - e.g.
Newspaper industry
SO WHAT CAN WE DO INSTEAD?
“The best things in life are free. The second best
are very expensive”
Can Erkay Nora Rekus Rebecca Teboul Veronika Kiejnich Ximena Velasquez
QUESTIONS?