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The Power of 'Free' and the Virtual Toaster

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gimg6.gifWe linked earlier this week to a dialogue — or blogalogue — between VC Fred Wilson and WIRED Editor Chris Anderson about so-called Long Tail b-models and the many creative ways in which you can leverage them to generate revenue for your startup.

We highlighted a few of the more creative monetization models called-out by Anderson and Wilson. One that we liked was “alternate output”, a.k.a, print-on-demand ebooks and pdfs.

Well, today we read a post by that spins the Long Tail “free”- or “nearly free”- ball forward yet again. In How I Increased My RSS Subscribers to Nearly 900 in Less than 2 Weeks, Michael Martine of Remarkablogger boasts:

” In less than 2 weeks, I’ve managed to increase my blog’s subscriber count by nearly 200% to about 900 subscribers… Many of you already know how, but I’ll say it anyway. Two words: Free Ebook.

Michael’s testimonial is first, proof (again) of the primary Long Tail concept that real value can be derived from free content. But he also asserts something new: that the power of “free” can be extended even deeper into your b-model, to your secondary products, the ones you might have thought to monetize in “Long Tail one.”

OK, so giving away free ebooks sounds like just another form of marketing. But, it’s different. Here’s why.

Michael explains that his model — we’ll call it the incremental monetization model, or “Long Tail two” — will only work if your giveaway is “something good enough to pay for.”

Michael is writing here about the economics of the blogging business. But if you substitute “new media business” for “blog” and eliminate “RSS” to be inclusive of any sub, his theories take on broad business application.

As far as [new media businesses] go, perhaps the most important metric for success is the number of … subscribers. Subscribers give you permission and attention, which are two of the most valuable assets a business can have…

Not only did I want to use a free ebook to increase my … subscriber count, I also wanted to use it as a springboard for future offers and services. And there is simply no way in hell anyone would go for that… unless the free product provided the same amount of real value as something that was worth paying for…

So why would I give away something that I could have easily charged as much as a real book for? Because … If I offer a product or service in the future, it is my hope that you will find it worth your time and money because I have already proven myself to you and earned your trust.”

Michael bets that he’s earned your loyalty by giving you something you would have paid for, but didn’t have to.

In way this is VERY old school. Retailers and commercial service providers — think banks of a bygone era — have long-given away treats to to lure customers.

Think toasters. Now think: Virtual toasters.

So take your “Long Tail” b-model and kick it up a notch, simply by leveraging that old school “up-sell” trick with a virtual toaster that sings.

Here are Michael’s edited tips on how to do it:
* Repurpose your existing content.
* Expand on that repurposed content.
* Remember you’re creating a real that should be valuable enough to sell.
* Think about how you can use the free as a launch pad.
* Ask for [help] from others to help boost your launch. (In this case, it was links.)

“Flying Toaster” image credit: Peter Ashford

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