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Forget Free–Freemium is the Future

andersonfree.jpgAt the Web 2.0 Expo yesterday, GalleyCat correspondent Cynthia P. Shannon sat in on the panel discussion, Cha-Ching!: How to Cash in with a Freemium Business Model. The panel was moderated by Wired editor and author Chris Anderson–who wrote the book, “Free: The Future of a Radical Price.”

Shannon summarized: “Anderson admitted that during the first decade of the web, everything was free. But free doesn’t work anymore–it was never a viable business model. Freemiums–tiered layers of value–are the way to go, and Pandora, Animoto, and Skype have all witnessed success with this concept.”

Her report continued: “There was lots of talk about the iPad and how apps will change, how mobile devices in general are offering a way to enhance the freemiums. As usual, publishers should take their lessons from the music world. Pandora makes a great case study for this, and publishers should check out the site (chances are, all the editorial assistants are already using Pandora).”

She added: “Anderson noted that he was at a textbook convention the other week, and that his insight there was that textbooks might soon be free, and that those savings can then be applied to getting students an iPad (thus reducing the load they carry to school AND providing access to richer content). The things that will be paid for are the test preps, etc.”

Shannon concluded: “I went up to Anderson to ask about how this applies to trade book publishers. He responded that publishers need the help of retailers to define and implement the pay model. They also need to consider how freemiums apply on a global scale, since copyright is a major issue in print … For authors who are yet to be published, his advice is to make it simple and clear–defining exactly what you’re willing to give away. Don’t try to do too much. For example, consider giving away 10,000 downloads of the book, and then let the actual sales of the book turn it into a bestseller.”

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