Key Messages
The Business Strategy Of Scarcity In The Twentieth Century: Making More Money By Controlling Supply And Protecting Demand
In the past, companies believed that by keeping their products scarce, they could generate more revenue.
This was especially true of the music and technology industries in the 20th century.
Record labels realized that as radio stations allowed people to listen to music for free, this would limit demand for live shows and records sales.
To counteract this, they tried to get radio stations to stop playing their product altogether.
To control distribution of their product and protect its demand, businesses relied heavily on copyright laws; Microsoft’s Office suite being a prime example at $300 per disk.
Companies also kept competition at bay by ensuring high entry barriers were in place.
This approach to business has been used as far back as the 20th century with record labels and tech giants alike believing that if their product remained scarce, it could generate more money for them.
There Is No Such Thing As A Free Lunch: Exploring The Unseen Cost Of ‘Free’ Products
The idea that “there’s no such thing as a free lunch” is well recognized.
That phrase originated from saloon bars in the 19th century, but it applies to marketing gimmicks today as well.
Whenever an item is offered supposedly free of charge, no matter what it may be – a razor, Jello recipe book, or even something like a mobile phone – you have to ask yourself: How am I paying for this?
Most often the answer is quite simple.
If you’re getting a free razor, chances are you’ll have to buy blades so that you can actually use it.
And if you get a free Jello recipe book, well you’ll have to buy Jello in order to utilize the recipes.
In other words, the cost of the ‘free’ product isn’t eliminated at all; instead it’s just shifted onto another item which still needs to be paid for by either yourself or someone else entirely.
In some cases these costs are drawn out into subscriptions (like phone fees) or subsidized by third parties (such as with magazines and newspapers).
Even when an item appears to be truly free there’s always someone paying one way or another.
That’s why we can say there’s no such thing as a free lunch: because eventually somebody has to pay for it!
The Challenge Of Balancing Free Giveaways And Consumer Appreciation
For companies, free giveaways can be difficult to navigate.
Despite being incredibly popular with consumers, there is the inherent risk that people won’t value them to the same degree when there was no monetary exchange involved.
In fact, studies have shown that there is a distinct psychological effect at play here: Once consumers invest money into something – whether it’s purchasing a magazine or a cereal bar – they are more likely to not only value but appreciate it more as they had to go through an effort of decision-making in order to acquire it.
This also explains why advertising space in paid-for magazines is five times as expensive as space in free publications; readers who pay for content are far more likely to hold it in higher regard and thus be more receptive to advertisements than those who don’t.
Therefore, while offering products for free can lead to huge consumer interest, those same customers often treat “free” items as less valuable and desirable than something they would have paid for.
This has consequences for companies giving away things such as samples or trial periods as it limits just how much customer commitment they’re able to create through these campaigns.
Digital Product Prices Will Eventually Reach Zero Because Of Cheaper Technology, Infinitely Reproducibility, And Free Online Marketplaces
When it comes to physical products, they cost something to create since they are made up of material.
This can be things such as wood or plastic which inherently have some cost associated with them.
But when we look at digital products, like software and music files, we see something very different – bits of information that don’t cost anything.
This is due to a number of reasons.
Firstly, there is the advancement of technology which allows us to store, transmit and process bits cheapley.
Think about an iPod from the past compared to one today – years ago only millionaires could afford such a device while today almost everybody can purchase one.
Not only this but our internet connections are faster and cheaper than ever before too.
The second reason is that because its digital product, it can constantly be reproduced infinitely without any extra cost making production volume irrelevant since its all just bits of data – it doesn’t matter if you make 1 copy or 1 million copies!
The final point is that the internet has given us access to a freeMarketplace where you can sell your digital products with no fees whatsoever – this results in companies needing to keep prices as low as possible so they are close bto marginal costi.e the cost required for producing digital product .
These three factors – better technologies available, zero marginal costs and a competitive market place will drive the price down for these digital products eventually reaching zero – after all once these resources are produced nothing more needs to be done for distributing them meaning there’s no additional costs added!
The Internet Has Opened The Door To A New Gift Economy Where Attention Is Currencies
The Internet has enabled a revolution in how content is created, shared and received.
Through social media platforms, millions of amateur writers are able to reach audiences they could never have previously imagined.
What’s more, the content they create – blog posts, reviews, guides – all come totally free of charge.
But this has also created a new type of online economy; an economy where the value of content is not measured by money but by attention.
Content that is widely shared and liked on social media can be seen as having greater value than something with fewer views or likes.
And in this new gift economy, it’s possible to achieve something for nothing.
By creating compelling content for free and garnering attention for it through likes, follows and retweets, it is possible to become part of the attention economy without investing anything other than time and effort.
Embrace Piracy Or Negate It: How Companies And Artists Are Adapting To The Twenty-First Century Marketplace
In the 21st century marketplace, piracy is a fact of life.
Consumers can often access pirated copies of music, videos and software online at very little cost.
This has been true in China specifically, where 95% of all music sold is pirated.
In such cases, artists have had to learn to accept it as a form of free advertising that has helped expand their fan base rather than strive against it.
Xiang Xiang, a Chinese pop star who has sold over four million albums without any being paid for due to piracy, is one such example.
The pirates turned out to be dedicated fans who now pay for her live concerts or product endorsements.
Monty Python are another: They successfully quelled the illegal uploading of their work on Youtube by releasing everything for free – resulting in their DVD’s topping bestseller lists three months later due to increased demand.
In today’s digital world, piracy is almost unavoidable.
To survive its effects on profits, companies and artists need to either take advantage of piracy or release their own products for free- as Monty Python did- and stimulate interest in the original product instead.
Google’s Successful Business Model: Offer Something For Free To Build An Audience And Then Study Them To Find Out What They’Ll Pay For
Google has developed a successful business model that relies on offering products for free to build an audience.
This allows them to collect valuable data from their customers and use it to create even more products that have the potential to be profitable.
With this model, popularity is just as important as revenue so it serves digital companies of all sizes well.
By offering products for free, companies can gain access to consumers in order to collect data and understand what people will actually pay for.
This allows digital companies to capitalize on their growing user base by studying the customer responses and creating better products based on what people are willing to pay for.
In conclusion, smart digital companies should offer their product for free in order to secure a large user base with which they can eventually make money.
By understanding their audiences through customer research, they can then use those insights to develop better products that people are willing and eager to pay for.
The Key To Monetizing Your Product: Offer A Free Version And A Premium Paid-For Version
Once you’ve built an audience around your product, the next step is to offer a premium version of it.
Companies like Google Earth, Spotify and Flickr all offer two different versions – one free, and one paid-for version with additional features.
For example, they offer an unlimited storage option as well as ad-free music streaming or even more advanced aspects of their services such as 3D view on Google Earth.
Arduino goes a step further by releasing the blueprints for their hardware for free but charging for the pre-assembled product which makes it easier for people who don’t want to go through the hassle of building it from scratch.
By offering both free and paid-for options of your product or service, you can build a large audience before monetizing that audience via a premium upgrade.
This enables customers to get acquainted with your product before making an informed decision about buying the more expensive plan.
Wrap Up
This book’s main message is that a “free” product was once considered a marketing gimmick, but the digital revolution has changed that.
These days, offering free products is an accepted business model, and companies should take advantage of it in order to succeed in today’s market.
The book answers some important questions as well: it explains that before the digital revolution, companies used to think that if they made their products scarce, they could make more money, and how the zero cost of digital products will cause their price to drop, leading to a gift economy where content is free and valued by attention.
It also suggests using piracy or releasing one’s product for free as a way of building an audience and then finding out what people are willing to pay for.
In summary, businesses today must embrace the concept of giving away their product for free in order to survive in an ever-changing landscape.
The Benefits Of Offering Your Product For Free: A Leg Up On Exposure And Engagement
The idea of offering a free version of your product may sound counter-intuitive, but it can be incredibly powerful for marketing.
When you have a great book on marketing, for example, offering it to readers for free can be an incredibly effective way of getting the word out and reaching potential customers.
With Natures Nutrition‘s Free Book Summary, you get the benefit of their key insights and actionable ideas broken down into easily digestible sections.
You don’t have to buy the entire book – just read their summaries and pick up the most important points without all the extra fluff!
The book summary is packed with useful tips that are sure to give you a leg up in marketing your own project or business.
