Free as a business model

Fred at A VC has a very interesting article on free as a business model.

I commented on his site, then realized that the comment was far too good to not post here too … So go read his post, then come back and read this.


OK, time to chime in:

I’m starting up a division for Premier ( and do some marketing consulting for a start-up ( so I read this article with interest.

I think that if you’re considering free as a marketing strategy, there are three key question to ask ask and answer in a very hardcore way:

1) who’s your customer?
2) how do you define your customer?
3) how will you attract that customer?

If you define your customer as the person who pays you, Google’s customer base just shrunk 99% – their customer is the advertiser. Everything else is just honey to bring in the bees.

To me, the lesson that the guy above with the Wiki isn’t getting is that giving the product away isn’t a good way to sell it.

Google’s product, from this perspective, is NOT search. It’s audience. Attention. That’s what Google manufactures. And then they sell it to their customer: the advertiser.

Fairly simple, really.

But it’s based on a very hard-nosed no rose-tinted-glasses focus on answering the key questions.