may-2010

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TECH BUSINESS “Facebook acebook had 300 million users and a dictionary entry entry before it turned a profi t” The business models FREEMIUM – basic services are free, but users pay for ‘premium’ content. See: LinkedIn AFFILIATED – your site drives traffi c to a site that sells a product or service. See: any price comparison site SUBSCRIPTION – users pay a monthly fee to access the site. See: Netfl ix and other legal TV download sites VIRTUAL GOODS – users buy virtual goods, such as points for Second Life or role- playing games. See: Facebook gifts ADVERTISING – you sell space on your site, with prices set according to your traffi c or clicks. See: news websites 44 Holland Herald FREE In 2009, micropayments were often hailed as the future of e-commerce by those hoping to fi nd ways of making money online. The concept is simple – through a micropayment website, users buy access to individual items – an article for $0.25, a news item for $0.05. But these fail to address basic issues according to Clay Shirky, one of the most prescient and respected writers on matters related to the Internet. Writing about micropayment site BitPass in 2003, he said, “BitPass will fail, as FirstVirtual, Cybercoin, Millicent, Digicash, Internet Dollar, Pay2See. These systems didn’t fail because of poor implementation; they failed because the trend towards freely offered content is an epochal change, to which micropayments are a pointless response.” BitPass closed in 2007. But as Google has proved, with a 2009 net income of $6.52 billion, there is money to be made when giving your product away. But it wasn’t always so, as Nutley points out, and Google, “retro-fi tted this way of making money” on its free search engine by selling adverts. Others have done the same, as Facebook and YouTube use free services to build huge audiences in the hope of future revenues from advertisers. They are not in Google’s realms yet. And as Nutley points out, “the fact that online advertising is seen as a distraction is writ large for them. They have tried this traditional method and it’s hard for them to make it work.” If it takes Facebook 300 million users to make money, what hope is there for the start-up entrepreneur? The answer <strong>may</strong> be ‘freemium’. Here, a fi rm gives away enough of its product to make it popular, or even better, vital, and charges for the rest. Consider Adobe, which gives away its Adobe Reader, without which its PDF software could never have taken off. But in many cases, fi rms have to give away the best of their product – be it social networking, music or headline information – to generate interest, leaving the second-rate stuff at a premium rate. Ultimately, this is a conundrum that business must solve as more industries move online. Because, in the words of Chris Anderson, the author, and editor-in-chief of Wired, “every industry that becomes digital eventually becomes free.” Words by Matt Farquharson and Jane Szita
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Page 1: Holland Herald MAY 2010 YOUR COPY T
Page 5 and 6: Photo cover and this page: Carl Hje
Page 7 and 8: 32 Mexico calling Colour and cultur
Page 9: 3 rings from the Steltman Alexandra
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may-2010

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