Comments on: What’s free today may not be free tomorrow. http://www.unstructuredventures.com/uv/2009/05/16/free-network-economics/ Translating Business Strategies into Financial Models Thu, 04 Mar 2010 12:39:10 -0800 http://wordpress.org/?v=2.9.1 hourly 1 By: Taylor Davidson http://www.unstructuredventures.com/uv/2009/05/16/free-network-economics/comment-page-1/#comment-2052 Taylor Davidson Mon, 18 May 2009 11:23:08 +0000 http://www.unstructuredventures.com/uv/?p=1567#comment-2052 There are two points here:<br><br>#1 "Free" works at certain points in product, company and industry lifecycle given the competitive environment, network economics, etc. Certain points, but not all at all times.<br><br>#2 We happen to be viewing "free" through our particular frame of reference over a short time frame (a couple years), not enough time to get a broader picture of how today's free strategies effects tomorrow's industry structure.<br><br>It's less about "free" as a strategy on its own, more about understanding how it fits in with the universe of strategies. There are two points here:

#1 “Free” works at certain points in product, company and industry lifecycle given the competitive environment, network economics, etc. Certain points, but not all at all times.

#2 We happen to be viewing “free” through our particular frame of reference over a short time frame (a couple years), not enough time to get a broader picture of how today's free strategies effects tomorrow's industry structure.

It's less about “free” as a strategy on its own, more about understanding how it fits in with the universe of strategies.

]]> By: Taylor Davidson http://www.unstructuredventures.com/uv/2009/05/16/free-network-economics/comment-page-1/#comment-2330 Taylor Davidson Mon, 18 May 2009 11:23:08 +0000 http://www.unstructuredventures.com/uv/?p=1567#comment-2330 There are two points here:<br><br>#1 "Free" works at certain points in product, company and industry lifecycle given the competitive environment, network economics, etc. Certain points, but not all at all times.<br><br>#2 We happen to be viewing "free" through our particular frame of reference over a short time frame (a couple years), not enough time to get a broader picture of how today's free strategies effects tomorrow's industry structure.<br><br>It's less about "free" as a strategy on its own, more about understanding how it fits in with the universe of strategies. There are two points here:

#1 “Free” works at certain points in product, company and industry lifecycle given the competitive environment, network economics, etc. Certain points, but not all at all times.

#2 We happen to be viewing “free” through our particular frame of reference over a short time frame (a couple years), not enough time to get a broader picture of how today's free strategies effects tomorrow's industry structure.

It's less about “free” as a strategy on its own, more about understanding how it fits in with the universe of strategies.

]]> By: Fred H Schlegel http://www.unstructuredventures.com/uv/2009/05/16/free-network-economics/comment-page-1/#comment-2041 Fred H Schlegel Sun, 17 May 2009 12:40:47 +0000 http://www.unstructuredventures.com/uv/?p=1567#comment-2041 I've been involved in a lot of industries where 'free' has caused pricing disruptions. Your statement here that sooner or later somebody has to pay for the 'free' item is what often gets lost in the various discussions and is a great point to start from. If the value of the user's attention does not equal the cost of the product then third party payment systems break down over time. In the past this usually means a short term reduction in price to the end user (for items used as loss leaders and premiums for example) but as time goes on prices go back up and/or selection declines (because mfgs. are forced into a low price strategy as consumers perception of value has been thrown off).<br>Pipeline and end-user device may be where those consumer payments end up coming from or other subscription methods like the Amazon api model you talk about. Point is, as the cash cow broadcast and cable model breaks down the cost structure that drives hollywood will have to adjust and other cash flow streams will have to be created. I don't think the advertising model will provide enough cash to keep the higher quality content coming even with drastic cost adjustments - (may be wrong, but doubt it - high quality is expensive) so the era of Free continues - but a layer consumer directed payments seems likely. As you say - 'tomorrow's strategies will not be today's' I've been involved in a lot of industries where 'free' has caused pricing disruptions. Your statement here that sooner or later somebody has to pay for the 'free' item is what often gets lost in the various discussions and is a great point to start from. If the value of the user's attention does not equal the cost of the product then third party payment systems break down over time. In the past this usually means a short term reduction in price to the end user (for items used as loss leaders and premiums for example) but as time goes on prices go back up and/or selection declines (because mfgs. are forced into a low price strategy as consumers perception of value has been thrown off).
Pipeline and end-user device may be where those consumer payments end up coming from or other subscription methods like the Amazon api model you talk about. Point is, as the cash cow broadcast and cable model breaks down the cost structure that drives hollywood will have to adjust and other cash flow streams will have to be created. I don't think the advertising model will provide enough cash to keep the higher quality content coming even with drastic cost adjustments – (may be wrong, but doubt it – high quality is expensive) so the era of Free continues – but a layer consumer directed payments seems likely. As you say – 'tomorrow's strategies will not be today's'

]]> By: Fred H Schlegel http://www.unstructuredventures.com/uv/2009/05/16/free-network-economics/comment-page-1/#comment-2329 Fred H Schlegel Sun, 17 May 2009 12:40:47 +0000 http://www.unstructuredventures.com/uv/?p=1567#comment-2329 I've been involved in a lot of industries where 'free' has caused pricing disruptions. Your statement here that sooner or later somebody has to pay for the 'free' item is what often gets lost in the various discussions and is a great point to start from. If the value of the user's attention does not equal the cost of the product then third party payment systems break down over time. In the past this usually means a short term reduction in price to the end user (for items used as loss leaders and premiums for example) but as time goes on prices go back up and/or selection declines (because mfgs. are forced into a low price strategy as consumers perception of value has been thrown off).<br>Pipeline and end-user device may be where those consumer payments end up coming from or other subscription methods like the Amazon api model you talk about. Point is, as the cash cow broadcast and cable model breaks down the cost structure that drives hollywood will have to adjust and other cash flow streams will have to be created. I don't think the advertising model will provide enough cash to keep the higher quality content coming even with drastic cost adjustments - (may be wrong, but doubt it - high quality is expensive) so the era of Free continues - but a layer consumer directed payments seems likely. As you say - 'tomorrow's strategies will not be today's' I've been involved in a lot of industries where 'free' has caused pricing disruptions. Your statement here that sooner or later somebody has to pay for the 'free' item is what often gets lost in the various discussions and is a great point to start from. If the value of the user's attention does not equal the cost of the product then third party payment systems break down over time. In the past this usually means a short term reduction in price to the end user (for items used as loss leaders and premiums for example) but as time goes on prices go back up and/or selection declines (because mfgs. are forced into a low price strategy as consumers perception of value has been thrown off).
Pipeline and end-user device may be where those consumer payments end up coming from or other subscription methods like the Amazon api model you talk about. Point is, as the cash cow broadcast and cable model breaks down the cost structure that drives hollywood will have to adjust and other cash flow streams will have to be created. I don't think the advertising model will provide enough cash to keep the higher quality content coming even with drastic cost adjustments – (may be wrong, but doubt it – high quality is expensive) so the era of Free continues – but a layer consumer directed payments seems likely. As you say – 'tomorrow's strategies will not be today's'

]]> By: Will Dearman Lifestream » Daily Digest for May 17th, 2009 http://www.unstructuredventures.com/uv/2009/05/16/free-network-economics/comment-page-1/#comment-2040 Will Dearman Lifestream » Daily Digest for May 17th, 2009 Sun, 17 May 2009 05:23:10 +0000 http://www.unstructuredventures.com/uv/?p=1567#comment-2040 [...] What’s free today may not be free tomorrow. — 2:33pm via Google [...] [...] What’s free today may not be free tomorrow. — 2:33pm via Google [...]

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