how do you make money by giving something away for free? with ian makgill
TRANSCRIPT
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Spend Network .... ....Making sense of the world’s spending data
How to make money when
you give something awayfor free.
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Objectives:
1. Understanding value
2. How free business models work
3. Explore four different business models
4. Develop your own business model using existing d
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@ianmakgill @spendnetwork
“Information wants to be
Stewart Brand, 1984
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
“On the one hand information wants to be expe
because it's so valuable. The right information in place just changes your life. On the other ha
information wants to be free, because the cost of g
out is getting lower and lower all the time. So yo
these two fighting against each other.”
Stewart Brand, 1984
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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Value:
When information can help someone…
•meet their goals;
•empower their work;
•or change their outlook;
then it has value. Once it has value, you can charge.
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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Value:
Q: When does information gain value?
A: Depends on the user’s view of what is value
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Value:
People pay for answers to questions.
Description Value
Data Raw data feeds Data quality, timeli
Information Processed data Quality, ease of acc
Insight Research Relevance to user
Intelligence Specific to user Pedigree of researc
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Creating value:
How can we generate value for clients?
Actions
Data Aggregation, cleansing, linking, publ
Information Publish data that can be searched / q
Insight Regular market reports, articles.
Intelligence Analysis specific to a client.
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Examples of data value creation:
What are other firms doing to create value?
Actions
Data Met Office, Open Corporates, Spend N
Information Experian.
Insight Gartner etc.
Intelligence Consultancies, Kroll
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
A look at four free business models
•Free as a marketing tool;
•free depending identity;
•freemium, free for basic, charge for premium;
•and free products that bind you into an ecosystem.
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Free as a marketing tool:
Characteristics:
•Requires a secondary product to sell (e.g. consultin
Pros:
•No complexity around limiting data access
• You are ultra competitive compared to rivals.
•The model can be scaled easily.
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Free as a marketing tool:
Cons:
• Your second option has to have a value offering.
•It is is expensive to set up and maintain.
•Two stage sale; you have to sell the free option and
the cost option.
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Free as a marketing tool:
Examples:
•Spend Network
•E&Y: Item Club
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@ianmakgill @spendnetwork
Free depending on identity:
Characteristics:
•Access to the product is free if you’re from a partic
e.g. charities, education etc:
Pros:
• A one-step sale.
• You are selling data, not services, so infinitely scala
•You can determine who accesses the data.
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@ianmakgill @spendnetwork
Free depending on identity:
Cons:
• Very hard to provide as a insight / intelligence sale
• You have to establish a regulated access point
•You have to establish rights over the data
•It can be hard to get the tension between free / valu
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@ianmakgill @spendnetwork
Free depending on identity:
Examples:
•Open Corporates
•Membership orgs: Federation of small businesses
•Educational access to services
•EduBase
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@ianmakgill @spendnetwork
Freemium
Characteristics:
•Basic services / functionality are free, premium ser
functionality comes at a price.
Pros:
•If free offering is good, it is can disrupt competitors
•Selling data product means that it is infinitely scala
•Clear distinction between free / cost
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@ianmakgill @spendnetwork
Freemium
Cons:
•Free product has to be attractive.
•Competitors could compete by freeing up same data
•Low conversion rates mean will mean you need a m
market
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@ianmakgill @spendnetwork
Freemium
Examples:
•LinkedIn
•Dropbox
•FloodWatch
•Ordinance Survey
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Free, but binds you into an ecosyste
Characteristics:
•Access to ensures that customers are bound to you
revenue stream comes through secondary sales.
Pros:
•Is very sticky, successful products create very high
• Wide range of secondary revenue options.
•If product is digital, it is infinitely scalable.
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@ianmakgill @spendnetwork
Free, but binds you into an ecosyste
Cons:
•Considerable start-up cost, offering has to be comp
•Suitable for mass markets, as small usage limits se
market.
•Requires more than data to make it work.
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@ianmakgill @spendnetwork
Free, but binds you into an ecosyste
Examples:
•Operating systems: Ubuntu, iOS, OSX, Android
•Office software: Google Apps
•Databases: PostgreSQL
•Dunn & Bradstreet
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@ianmakgill @spendnetwork
Exercise:
Working in groups, create a product offering.
Must have:
1. A free element
2. Use some form of open data
3. Details what you provide on data > intelligence sca
4. A revenue model
5. Clear description of how free access is delivered
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@ianmakgill @spendnetwork
Data > intelligence scale:
People pay for answers to questions.
Description Value
Data Raw data feeds Data quality, timeli
Information Processed data Quality, ease of acc
Insight Research Relevance to user
Intelligence Specific to user Pedigree of researc
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@ianmakgill @spendnetwork
Recap:
1. Build value by making people’s lives easier
2. Understand where you are on data - intelligence sc
3. Understand that digital content can scale infinitely
4. More specific to people’s needs has higher value
5. Understand four business models: Marketing, iden
freemium, eco-system.
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@ianmakgill @spendnetwork
“Information wants to be
Stewart Brand, 1984
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8/20/2019 How do you make money by giving something away for free? with Ian Makgill
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@ianmakgill @spendnetwork
Spend Network .... ....Making sense of the world’s spending data