Hugs are not free!

March 29, 2008

I guess I’m a little behind everyone else for the blog post about free, but I figure it’s about time I had my voice heard on the matter. I realize that probably no one besides Dave will read this due to too much free exposure to free, but here goes…

My first experience of free is when i got my first bank account. My mom and dad took me to Scotiabank to deposit money I had received for my birthday, and we put it in a bank account with an extremely low interest rate. About a year later, I received a notice saying that my account balance had gone up somewhere around the area of 1 cent. I was ecstatic. For some reason, the bank had decided to give me free money, for absolutely no reason (besides the fact that they had possession of my money for a year, but I didn’t know it then). I knew then that I would love free things for the rest of my life.Mob of people giving free hugs

On a different note, I’ve recently been reading Seth Godin’s blog post called Where to find great ideas and arresting images. In it, he quickly discussed how Flickr is a great place to get free pictures (such as the one to the right), as well as free ideas that can be used to put the picuture/image in context. Therefore, looking for inspiration, I searched over 500 images hoping for inspiration. I don’t know about inspiration, but I sure did see a lot of pictures about “Free Burma”, and “Free Hugs”.

In my search of free, I’ve realized two things. Nothing is ever free (including hugs), and people appreciate things more, if they aren’t free. I’ll touch on the second one first.

If a person’s greatest ambition is to purchase a new car, and they spend years saving every penny for this car, then when they eventually do get it, they will treat it like gold due to the hard work and sacrifice placed forth in obtaining it. If the same person were given a car for free, say like a student receiving a car from their parents, it is doubtful that this car will be treated with the same respect that it would have if they had personally purchased it. Free breeds disrespect for a product or service.

My second realization, nothing is free, I believe under every circumstance, must be true. Nothing would exist without someone putting forth an effort to create or obtain it. For the most obvious examples, technology, such as open source software, is not free. Even if it is free to the consumer, it cost somebody something. The developers of Linux give their software to consumers for free, but it costs the developers substantially in time and money. How do they make up for this cost? They charge people for the support of the software, like IBM does for Linux.

Conclusion, nothing is free. If one person gets something for free, another person (or company) had to pay for it. Hugs are free? No, they cost the person the energy and time to give that hug. Google’s search engine is free? No, Google makes billions in revenue as a result of having a search engine. Even if you find a $20 bill blowing across the road and pick it up, it is not free, because you had to expend the energy to chase after it and pick it up (as well as it cost the person that lost it by having $20 less, and having expending the energy in actually losing it).

At the very minimum, a product or service that a person receives for “free” cost someone time and energy. It is the amount of time or energy that a person puts into something that classifies it has free. At what amount of time or energy, is a product or service not considered free anymore? That is a question for the class, if anyone has indeed read this.

Cheers,

David McKenna

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March 16, 2008


Reading Chris Anderson’s article from wired.com, shed a lot of insight onto how different businesses are developing a 0$ business plan, by offering many services and products for practically nothing. This has a lot to say regarding how different companies and markets are evolving to capture consumers minds everywhere.

After reading the article, there was one thing that stood out in my mind. From my marketing class that I took last semester we talked about pricing strategies. Not saying that companies GLOBALLY have adopted an experience pricing strategy (Where the longer you make a product you find cheaper/efficient ways of producing that product, thus forwarding the savings onto the consumer), although I believe this plays a role in why things are being able to be sold cheaper almost to the point of being free. Competitiveness. Companies are becoming more and more competitive to grab consumers from other companies, and because several aspects of their company (in storage, and other products that can be produced in mass quantity) have become cheaper to create, maintain, and obtain.

Webmail has been around since you first got your computer. Only once you signed up you were given a limited amount of memory in which to store your emails. Of course you were always given the opportunity to PURCHASE extra space at a monthy/or annual fee. This was how the companies gained a profit. However, with the ability to create more storage for less money, companies are now offering UNLIMITED storage for emails for free. How will they survive if they no longer charge for extra storage you ask? Take Yahoo! For example. If you have an email account with yahoo, you are more likely to use their other offerings such as search, IM, etc…. With more people drawn to their free unlimited storage, this would also increase the usage of their search engine etc… where other companies would be drawn to this customer base to advertise.

Cell phones are becoming more and more popular. Everyone goes through the hassle of researching monthly plans, phones that come with a plan etc… There are two things to discuss here. The cost of cell phone plans have stayed relatively the same over years, with phone companies gaining a lot of their income from users that go over their monthly limit on minutes, text messages etc… What has changed though is the number of calls you can make monthly. Each phone call you make has relatively no cost to the phone companies, therefore to stay competitive, they continue to increase the amount of minutes and/or text messages. For my first cell phone I was charged 25$ a month for 80 minutes. That’s right 80 minutes. That seems ridiculous if they offered a plan like that now. For the same price one can get a plan that has at least 100+ minutes. Again cell phone companies like to stay competitive.
With the ability to stay within your limit of phone calls and/or text messages how to cell phone companies gain income? If you’re unable to get a “free” phone with your plan, you’re looking at 80$ plus to have a decent phone, and if you don’t have a plan, you are looking at over 200$ for the phone of your choice.

Fred Wilson created a great term “Freemium”. This ties in with webmail, but applies largely to free applications. Many free applications are funded by advertisements, or restrictions on what you are able to do unless you purchase the “Pro” version. With this, companies that offer these such applications are able to make profits from other companies advertisements, especially if the application is powered by other users (ie Limewire, Kazaa etc..), and also make a profit from selling the “non-advertised” version.

The cost of music CDs has declined over time (I remember paying 20$ for a CD, when you can get CDs now for 12$ or even less). This could be attributed to many factors: rising demand of CDs over cassettes, the lower cost of producing a CD, or competition from downloads. The music industry is finally understanding that lowering the cost for music (for downloads mostly), is a great way to effectively reach many more people, and thus increasing the amount of sales for any given song.
In the future I KNOW we will see many more services, and products be offered for basically free of charge, even those services or products that we may have not been introduced to yet.

Here are a number of links to resources you may find helpful when researching for your final assignment.

General:

Tagging, “Everything is Miscellaneous”

The Long Tail

Social Networking

When you find a good resource (e.g. a blog) be sure to check out links to other blogs and resources (the blogroll).

As I find links that may be of interest, I will post them to del.icio.us using BUS442 as a tag. I will also add the following tags as appropriate: socialnetworking, tagging, longtail, and copyright.

DAVE