Friday, October 3, 2008

The kinds of free business models

Recently, Chris Anderson has written, in his famous blog The Long Tail (the same name of his best selling book), several posts about the kinds of free business models. Those materials are for his new book, to be called "FREE". He is editor-in-chief of Wired Magazine.

After many changes, evolving through the posts, he defines what he calls the four kinds of free business models:
- Free 1 - Direct cross-subsidy - Get one thing free, pay for another
- Free 2 - Ad-supported - Third party subsidizes second party
- Free 3 - "Freemium" - A few people subsidize everyone else
- Free 4 - Gift economy - People give away things for non-monetary rewards (Reputation, attention, etc)

The last post, that he published today, called The biggest fortunes built on free, is about the billionaires who made their money on businesses whose products are primarily free to consumers, based in the Forbes 400 List. In the list, are the founders of Google and their main executives, the founders of eBay, Yahoo, Facebook, Paypal and many others.

This is an interesting point of view about the free business models.

Below are links to some posts, in chronological order:
- The three kinds of FREE
- Revised: the *four* kinds of FREE
- A revizualization of the four kinds of free
- FREE: the cocktail party version
- The biggest fortunes built on free

Chris Anderson is the author of a very nice book:
The Long Tail: Why the Future of Business is Selling Less of More

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