When Will Customers Pay For Content?

TIME & MONEY,
originally uploaded by D.S.OWENS

Anita Campbell reminds us that giving things away for free is NOT a new business model. It’s been something that we’ve done for a long time – always with the understanding that NOTHING is really free. Someone has to pay for the product, service or value traded.

We all learned that lesson the hard way during the internet boom and bust as we worked to figure out how to manage this new digital distribution channel.

While Anita was composing her “Freemium” business model post, across town, I was thinking about “The Free Line,” sales funnel concept. Giving things away for free is one thing, but what concerned me was WHAT people got for free and what they paid for.

Chris Anderson, of Long Tail fame, has literally coined a new term and concept model for distribution and product delivery in the digital age; The Long Tail.

His latest article brings more insight as to WHO will pay for content and a sort of evolution of a paying customer.

If you’re a kid, you probably have more time than money. That’s the
force behind MP3 file trading, which is kind of a hassle and but is
free (albeit illegal, of course!).  As Steve Jobs famously pointed out,
if you download music from peer-to-peer services, fixing the messy
metadata as you go, the time it takes to avoid paying means you’re working for less than minimum wage. Nevertheless, that works if you you’re time-rich and money-poor. Free is the right price for you.

But
as you get older, the equation reverses and $0.99 here and there no
longer seems like a big deal. You migrate into a paying customer, the
premium user in the freemium equation.

Segmenting Paying Customers from Freemies

Most people default to standard segments; like geography or gender or even level of usage.  But think about segmenting according to “Benefit” segments.

A benefit segment is a sort of end-use segmentation.  It gets you thinking about sorting customers according to the benefits they want to receive.

Domino’s is a great example – targeting customers who want FAST pizza perhaps more than gourmet pizza.

FedEx Kinko’s has targeted procrastinators with their upload to print service.  Taking advantage of customers who wait until the last minute and don’t want to drive.  That’s an offer targeted right after Chris Anderson’s point.

What benefit segments can you create that will help you draw a profitable free line.