Free: Class Overview and Introductions
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Transcript of Free: Class Overview and Introductions
Stanford BUS-21Martin Westhead
Mastering Marketing
Class Overview
How to make money by giving things away
Administrative Stuff
Timing: - Start promptly at 7pm.- Please let me know in advance if you will be late- Finish before 9pm
Tools:- Class linked-in group
Grading- Business plan- Contributions to class discussions- Contributions to Linked-in group
Slides published (for Free!)- Slideshare.com
LinkedIn Group
“Monetizing Free: How to make money by giving things away”
Please read and contribute- Comment on discussions- Share ideas and links- Discuss class material
Grades (for those being graded) base partly on your contributions
http://linkd.in/1ll7LNy
Grading - Business Plan Business plan for business that uses free can be:
- A new venture- A new product of an existing venture- Real or imagined- Non-free plan to deal with free competitor
Slide deck:- Business model
- How and when will you make money- Competition
- How will you beat existing competition and stay ahead of new competition- Launch plan
- How will you launch and get traction- Financials
- Investment cost – how much will you burn before you are cash flow positive- Possible size of the opportunity- Analysis of the cost of supporting free offering vs. revenue
Best 3-4 presentations given to me will present on the last day- Key criteria: reference material from the class
Class chooses the best – there will be a prize!
Discussions
Opportunity for class interaction- 20-30 mins
Topics decided the week before- Come armed with thoughts and ideas!- Suggestions for discussion topics welcome
Contributions count towards grade Be polemic!
- Discussions are no fun if we all agree
Guest Lectures
Brandon Harris – Senior Designer, Wikimedia Foundation
Peter Fishman - Principal Analytics Manager, Yammer, Microsoft
Mystery guest ?
Introductions - Me
Martin Westhead- Engineer and entrepreneur - Director of Global Payments at Groupon- PhD from the University of Edinburgh- Using and developing web technology since 1993- 5 years at Ning a large-scale (initially) free social network service- Excited about this course
Experience in Communities and Monetization- Run payments for a $6B business- Teach classes on Communities and Subscription business model- Executive experience in Free Internet businesses
Why do I care about free?
Followed the Web from the start- 1994 1st WWW conference at Cern
Early business models (90’s)- Build a free service- Get it as big as you can- Sell it to someone- Didn’t make much sense outside the
Valley Google, Facebook…
- Free services can make money 2009 Joined Ning
- a free service without a business model
- Watched the search for revenue until - a year later moved to paid
2011 Ning bought by Glam Media- I learned about Media business models
Open Source- Changing the software industry- Kill Bill Open Source billing
Changing our view of customers, customer value and even of corporations
What makes Free work?- Ingredients for success- Avoiding Failures- How do you make money?
Nothing more disruptive than a free price point
Introductions - you Introductions
- Name- Background- Why you’re here - What you expect- One non-class related fact about yourself
Poll: Free is obvious
1. It is obvious that Free-based business are the future
2. There’s no such thing as a Free lunch: its all smoke and mirrors and clever marketing
3. I think Free-based businesses are interesting but I’m not convinced they really work
Poll:B2B or B2C
1. I am most interested in consumer businesses2. I am most interested in enterprise businesses3. I am interested in both
Poll: Freemium or Platforms
1. I am most interested in Freemium2. I am most interested in Platforms
- Particularly Advertising3. I have no preference
What to expect from this course
The use of Free is a huge topic- Spans centauries of marketing- Being reinvented recently
This class:- NOT an economics course or
business theory- Practical introduction to the
key concepts- Lots of examples
Free is NOT a silver bullet- You still need a great product
No single answer- Customize the ideas
here for your use case- Innovate – Free is still a
big experiment
This course is a Safari
Study of Free business models is new
It is Zoology NOT Physics
Class Topics Setting the scene
- Expectations- Definition of Free- History of Free- Psychology of Free- Twenty-first century free is different
Core concepts - “Free” models
- Direct Cross Subsidy- Platforms (two/multi-sided markets)- Freemium- Pay what you want/Donations
- Abundance vs scarcity thinking- Mindshare markets:
- Reputation and attention - Demonetization
Filling out the picture- Competing with free- Open Source and
Community- Donations and Pay-
what-you want- Privacy, Abuse and
Overindulgence - Case studies
Lecture Plan Week 1 (April 1st)
- Introductions- Overview- History and Business Models
Week 2 (April 8th) - Model: Direct cross subsidy- Psychology of Free- Guest lecture – Peter Fishman
Week 3 (April 15th) - Model: Two sided markets- Advertizing- Abundance and Scarcity- Class Discussion
Week 4 (April 22nd)- Model: Pay what you want/donation- Mindshare markets- Communities- Guest lecture – Brandon Harris
Week 5 (April 29TH)- Model: Freemium- Open Source- Class Discussion
Week 6 (May 6th) - Competition in Free Markets- Guest lecture – TBD
Week (May 13th) - Successful Free
- Google- Games Industry
- Unsuccessful Free- Ning
- Privacy, Abuse, Ethics- Class Discussion
Week (May 20th) - Conclusions- Student presentations
References
“Free” by Chris Anderson- Free PDF / Amazon / Free Audio Book
“The Mind Share Market” by Nicholas Pujol- Amazon
“Predictably Irrational” by Dan Ariely- Amazon
Papers- “Two-Sided Markets: A Progress Report” Jean-Charles Rochet, Jean Tirole,
November 29, 2005- “Multi-Sided Platforms” Andrei Hagiu, Julian Wright- “The Art of Standards Wars”, Carl Shapiro, Hal R. Varian- “Competition in Two-Sided Markets” Mark Armstrong Department of Economics
University College London August 2002: revised May 2005- “Zero as a Special Price: The True Value of Free Products” Kristina Shampanier,
Nina Mazar, Joseph L. Rotman, Dan Ariely
Free Monty PythonNovember 2008