Free for all

December 2012

I’m forever saying that the internet has changed no fundamental rules of commerce, but I’m beginning to think I might be wrong, because there is a new kind of business out there in cyberspace.

It works like this: I’ll give you my product, or service, for nothing; but if you like it, please give me whatever you think it’s worth.  You don’t have to, but if no one pays, the service will come to an end, so why not bung me a few bob?  Or a bit more?

I’m not talking about charities either; these are old fashioned, profit making and tax paying companies, whose owners stand to get rich if it goes well.

It’s only the internet that makes this possible, because it’s a numbers game; even if only a tiny  percentage of your customers pay up, if you have enough customers it may still add up to plenty of cash.

If the service you provide can be delivered digitally (so no postal or shop front costs) or your product is digital (so can be reproduced infinitely at almost no cost) then the price of servicing a million customers is only a bit more than it would be to deal with a few hundred. 

Compare a bright software designer with a brilliant knitted toy maker.  Both need inspiration and skill to produce a new design, but once made, the software can be infinitely and instantly duplicated and delivered at very slight cost; however, knitted toys need wool, time, people and packaging to produce and deliver them, and that all costs money.

In fact, digital products are the ultimate in mass production; Henry Ford would be impressed.  No raw materials, no assembly lines, all you have to worry about is the delivery, and that is more or less immediate and very cheap. 

The premier example of such a website is Wikipedia, which depends entirely on the kindness of strangers.  Last year those strangers gave it $24m, entirely voluntarily, just to keep it going as it is. 

Two much smaller examples are SpyBot, one of my favourite antivirus programmes, which is free; you can donate something if you want, but you don’t have to; I’ve spoken to them, and the average donation is about $10 (the internet currency is almost always dollars) and on the back of this they support about fifteen employees and provide a first rate product.

Likewise, Radio Paradise, an internet Radio station that happens to suit my musical taste, is run by a husband and wife in California; they produce music all day, with no adverts, no sponsorship and very little speaking.  Everyone (including the artists and the tax man) gets paid, but their only income is the entirely voluntary donations of supporters.

I suppose these are a cross between a business and a social enterprise; they support their employees, provide a good service, and if you can’t afford it, you can still have it.

Mind you, we don’t seem to have embraced this modest philanthropy in Europe as readily as the more open handed Americans.  Spybot tell me that whilst half of their users are in Europe, 90% of their income comes from the USA. 

We Europeans seem all too keen to grab a freebie and run.  I don’t think this reflects well on us; but then we are notoriously mean tippers, so I suppose we are only conforming to type, but it’s not a very impressive type.

So if you see a “donate” button, on a web site, and you like what you are currently getting for nothing, give it a second thought.