Making Money With Free

‘How to make money with free?’ asks Gerd Leonhard, and goes on to recommend open licensing as a basis for a new content business: ‘The greatest thing that happened with the raise of Creative Commmons is that we’ve taken this idea that has been around pretty much for ever which basically says “I’m giving something for free in return for attention” and then finding a mechanism to get attribution and make money that way. And this has been around forever. That’s the way that musicians used to make money’ (Troxler 2008).

Chris Anderson (2009) concludes that ‘free is not enough. It also has to be matched with Paid. Just as King Gillette’s free razors only made business sense paired with expensive blades, so will today’s Web entrepreneurs have to not just invent products that people love, but also those that they will pay for. Not all of the people or even most of them—free is still great marketing and bits are still too cheap to meter—but enough to pay the bills. Free may be the best price, but it can’t be the only one.’

It is suggested that there could exist some analogy to business models common in the context of open source software—programmers (i.e. creators) distributing a basic package for free and aiming to earn money through customisations of this basic software and other added services for paying customers (Culture and Economy, p. 29).

In ‘Better than Free’, Kevin Kelly (2008) postulates a number of generatives that add value to the freely available material and hence are suited to generate payment. ‘A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time.’ Generatives, according to Kelly, are immediacy, personalization, interpretation, authenticity, accessibility, embodyment, patronage, and findability.

Similarly, Alex Osterwalder (2009) lists a number of ‘value propositions’ with price being the first one, followed by newness, accessibility, ‘getting the job done’, convenience and usability, brand or status, performance, risk reduction, customization, and cost reduction.

For the creative industries, the solution to the challenge of obsolete business models is innovation. The driver behind this need for innovation is to embrace open content as a given and to use its inherent potential to re-invent sustainable businesses. In an economy where content per se is free, money can still be made.

The full article was published in Supporting Service Innovation Through Knowledge Management by Patricia Wolf, Sami Kazi, Peter Troxler and Ralf Jonischkeit (eds.) Bristol: KnowledgeBoard, Zurich: Swiss Knowledge Management Forum, 2009. It is available through SSRN.