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Free and Freemium
Stefan Peter Roostwitter.com/spr2
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Stefan Peter Roostwitter.com/spr2
economist, web strategist, online business consultant, proud music, entrepreneur,
speaker, music publisher, brainfood specialist...whatever
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Please note: These slides were used in my talk at All2gether Now conference, Berlin
2010 as outline, so the explanation/context is unfortunately missing, if you did not
attend!
www.a-2-n.de
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Why Freemium?
Why giving away your productFOR FREE?
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Digital Goods:
Only First Copy CostMarginal Cost=0
No Rivalry in consumptionExclusion of free riders difficult
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From Scarcity Economy
toAbundance Economy
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Attention Economy:
Wealth of Information
=Poverty of Attention
(and a need to allocate that attention)
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Attention Economy:
Money follows Attention
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Digital Goods:
Value determined AFTER consumption!
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Assumption 1:You can only sell to people who see your
value!
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Assumption 2:more new content than everThe largest back catalogue
in history
Just one click away!(illegally&legally)
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This is a permanent change!
I'm sorry ;)
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Well, not really sorry!
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Still true:Lowest possible
price =
Marginal Cost of an additional unit
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Free=
Maximum Reach
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Assumption 3:
If something can be provided for free
someone will do it!
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Information wants to be free
=> there will be free copies anyway
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Music Industry was the Canary in the
coal mine => video, news,
books etc. will be next
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This is not a problem,
if you sell something, that cannot be
copied!
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Simple Model:x*C*S=Revenue
x=Reach/AttentionC=Conversion Rate
S=Average Revenue/Fan
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x*C*S=Revenue
Attention you generate (paid)
through sharing (free)Social Recommendation (free)
Derived (fan) Content (free)
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x*C*S=Revenue
Conversion Rate Brand
EmotionLoyalty
Artist History...
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x*C*S=Revenue
Average Revenue/Fan Direct Relationship
1000 Fan ModelProduct Diversity
Recurring PaymentsRoyalties through Fan Activity
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Mike Masnick:Connect with Fans
+ Reason to Buy = Artist Revenue
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What are the building blocks for a business
model?
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Sunscreen Song...(Baz Luhrmann)
If I could offer you only one tip for the future, freemium would be it. The long term benefits of freemium have been proved by scientists, whereas the rest of my
advice has no basis more reliable than my own meanderingExperience…
I will dispense this advice now.
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Use many different blocks to a well-balanced mix!
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Free is giving you reach!
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Being a Brand gives you
MonopolisticCompetition
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Stop thinkingFiles/Units!
Stop thinkingRecords!
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Become an IT company!
Access to Music is a software service
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Be the center of a Community!
Let fans interact through your service!
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Embrace Read/Write Culture!
Everything will be Read/Write
from now on!
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Create positive Attention & Viral
Loops!
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Create frequent Touch Points for
Fans (not just a release)
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Learn to connect with your fans!
Practise!
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Have a product on every price level!
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casual flattr Live events
NIN-Boxsets Fan-Meet&Greet-
WeekendsCrowd Funding
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Be damn good at what you do!
Stand up to the plethora of world class entertainment
one click away!
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Music itself is hard to innovate nowadays
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Better innovate in Image, Show,
Packaging, Intimacy, Channel
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Recorded Music is just the beginning,
not the end
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Get used to new thinking:
Audio Only might (eventually) die.
Fotos may die too!
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Keep the mystery!
Do not twitter like your buddy next door!
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Be better than free! (Kevin Kelly):
1. Immediacy 5. Accessibility
2. Personalization 6. Embodiment
3. Interpretation 7. Patronage
4. Authenticity 8. Findability
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Sell something that cannot be copied
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Uniqueness – orKeep fan switch cost
in mind
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Everything atomizes => Forget Album
=> Track => Elements
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Most want access, hardcore fans might want to own sth. of
emotional value
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Different levels of involvedness: It's about emotion
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More Music Business – less Music Industry
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The Time is now – Music for the People,
not Records!
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Markets are Conversions!
Read the Cluetrain Manifesto (again)!
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What to take What to take home?home?
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Most ideas have been tried out before
but:
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without easy payment
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with strings attached
(DRM)
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without instant mobile access
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not yet in a lean-back situation
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without bandwith for HD Video &
great sound
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without social recommendation /
sharing culture
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without the internet usage / number of pot. Fans of today
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The original Napster may have been the greatest music loving community- remember browsing everyones harddrive- nice instant illegal access- pure music, no strings attached- state of bliss
=> let's try again, but this time legally, with payment for artists involved
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Thank you!Get in touch:
Stefan Peter Roostwitter.com/spr2
www.proudmusiclibrary.com www.proudsourcing.de