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(It's 3am and I'm running on about 3 hours sleep from the night before, so my ability to argue effectively is diminished, instead I will just provide a specific

by froo 17y ago

(It's 3am and I'm running on about 3 hours sleep from the night before, so my ability to argue effectively is diminished, instead I will just provide a specific example as a case FOR free.) Many of you would probably have visited homestarrunner.com - it's a site that provides animated flash cartoons that is updated regularly. For all intensive purposes, the flash cartoons are just like online video. Unlike most other online video sites, they haven't succumbed to needing to monetise with ads, nor do I think their model constitutes as freemium. Quite simply, they provide additional value to their fanbase on top of the value they already provide for free. They monetise their site by selling tshirts and figurines and all sorts of various trinkets and curiousities. The fact is, that without giving away content for free, they wouldn't have garnered favour with viewers, nor created a fanbase who would purchase their wares to support the sites costs. Now while I don't know how much the guys are making, the site has been going for nearly 9 years without any external funding, so they probably are turning a profit.

param 17y ago
Well, to his point, he is saying that you should never give away the core parts of your business for free, else you will never be able to charge for them. In the example you cited, I would think of it as the videos being the marketing for the goodies, and goodies being the core business. If they ever started with giving away free t-shirts, they would never be able to charge for it, even though they would get a large user base from that model. Note that they wouldn't also be very successful at giving the basic t-shirt designs for free and charging for the better ones.
- froo 17y ago
  Not at all, the content has always been the core business - without the content, there wouldn't be a market for the merchandise. Merchandise supported revenue isn't a new business model, I mean, that's how George Lucas made the majority of his money, merchandising from the Star Wars sagas. Homestar Runner's business model is a version of the one used in classic cinema, the difference being they made the initial price point $0 - instead of the cost of a movie ticket, so that everyone could enjoy their content and they've helped to reduce the barrier to entry for enjoyment of that content. When you consider marketing and distribution costs are one of the main costs associated with any film project (for example, Disney used to take a 50% cut of Pixar's films) Homestar Runner's costs in this arena have been essentially zero, given they've gotten by on word of mouth advertising. And it's worked for them, they've even had other people borrow ideas to create new online video projects that have gone on to be big successes too. The Askaninja Ninja was inspired by Strongbad's Emails.

by froo 17y ago

param 17y ago

Well, to his point, he is saying that you should never give away the core parts of your business for free, else you will never be able to charge for them. In the example you cited, I would think of it as the videos being the marketing for the goodies, and goodies being the core business. If they ever started with giving away free t-shirts, they would never be able to charge for it, even though they would get a large user base from that model. Note that they wouldn't also be very successful at giving the basic t-shirt designs for free and charging for the better ones.

froo 17y ago
Not at all, the content has always been the core business - without the content, there wouldn't be a market for the merchandise. Merchandise supported revenue isn't a new business model, I mean, that's how George Lucas made the majority of his money, merchandising from the Star Wars sagas. Homestar Runner's business model is a version of the one used in classic cinema, the difference being they made the initial price point $0 - instead of the cost of a movie ticket, so that everyone could enjoy their content and they've helped to reduce the barrier to entry for enjoyment of that content. When you consider marketing and distribution costs are one of the main costs associated with any film project (for example, Disney used to take a 50% cut of Pixar's films) Homestar Runner's costs in this arena have been essentially zero, given they've gotten by on word of mouth advertising. And it's worked for them, they've even had other people borrow ideas to create new online video projects that have gone on to be big successes too. The Askaninja Ninja was inspired by Strongbad's Emails.