The freemium business model was articulated by venture capitalist Fred Wilson on 23 March 2006:
“Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base.”
Does it work?
Well, recently we have shifted a shitload of t-shirts, 1000 copies of our last EP and have been commanding gig fees of around £1000 each, and i think a lot of this has been possible due to us offering our entire catalogue of music for free download, as well as other things of course.
Seth Godin i think is a great example.
You can download all his books for free. You can even download mp3s of him reading his books to you for free! Sometimes weeks before they are released in hard copy.
Yet his books are still best sellers every time.
His books cost around $10.
Then he has the next level product, for businesses – his DVD pack at a measly $800(!)
Then the Premium product at probably $20,000, Seth will come and talk to you.
To put this model to work as a band we could:
FREE: MP3s of all music / stickers / etc.
£10 CD / Tee / gig ticket
£25 premium box set product
£1000 book the band
This is currently what i am operating for Sicknote and it seems to be working well.
I aim to put this model to work for all bands on Tantrum Records soon.
Now the next key thing is Growth. How can we grow the buzz, being free will obviously help things spread – but to what extent? How can we measure this? What can we do in order to help things grow further? What exactly does being FREE achieve?
Things i will talk about soon. But please post your thoughts below as i’m in the process of trying to work out all of this and will welcome any help.