Free is good for our business Mr CEO


As I was highlighting in Web 2.0 goes world wide, the hype and laser speed explosion of Web 2.0 in the US is now widely making it in Europe. Here is an interesting first edition of The Next Web conference that took place in Amsterdam last week – July 7 – reinforcing my claim. No big names in the list of sponsors and the conference is not free. A good indication of quality content ? Bingo, they had Kevin Kelly – the founding executive editor of Wired magazine – as a keynote speaker. He was apparently very inspirational to the audience as Ed Yourdon reports in his long post about the keynote. They had six European startups explaining their business model to the 250 people or so attending: eSnips, Widsets, Allpeers, Netvibes, Plazes, and Hyves.

Communities were really at the very heart of everything, as expected, and Kevin’s keynote emphasized the “give it for free” business model which is a key issue for all “legacy” software companies. It’s very funny to attest these heavy weight software corporations trying to deal with the paradigm shift: Oracle, Microsoft and the lots. As I did spend all of my IT career in software, I’ve been watching the rise of open source and now entered its bells and whistles with Sun Microsystems when we decided, back in early 2005, to move our flagship operating system Solaris in the open source world with OpenSolaris. The massive reaction from our sales force at that point was: but how are we going to make any revenue out of a free stuff ? It did, and it still does, take a lot of energy to show that the more we push our intellectual property in the open source community, the more we grow our software revenue stream. The major mindset change here for a sales rep is that revenue is coming from all services surrounding the technology deployment within the enterprise rather than selling a software license itself.

Another take at it – which is very core to Web 2.0 – is advertising based business models, Google being the most visible of them. The dynamics relies on sharing free stuff to attract millions of consumers. Finally, after more than 10 years preaching about the Internet emerging business models that eye balls can drive to revenue, this has become a solid reality even in Wall Street. Volume turns into asset that can be monetized.

I’m not going to demonstrate at length here how fighting the open source business model is like fighting gravity for all software firms, but I was stunned with this free stuff concept moving to the brick and mortar world. I do not know if you went through this exercise of convincing CEOs and CFOs that “free is good”, but this could be the ultimate test for motivational speech specialists. For us, fellow marketers, the question is : how will we react when our competitors will give their products and services for free ? KLM was offered that crazy idea but turned it down. But now RyanAir is making big bets on Make Fying free. and becoming the most profitable European airline. This is not a prediction but it’s happening now: they already offers free fares to a quarter of its customers i.e. a total of 3 Million free seats last year !

Yet another dimension to Marketing 2.0. To be continued …


One response to “Free is good for our business Mr CEO

  1. I am not sure give it free will work for real business software. Most companies are still playing with freemium (klir), or low price points (fiveruns). Then again some might succeed in niches (Spiceworks (www.spiceworks.com) in SMBs)

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