De-monetized businesses grow faster and can ultimately be worth more money than those that charge.
Some of the largest businesses of our time are largely free. Google shows ads on fewer than 10% of searches; they give away the other 90%. Skype is worth $8.5 billion because it’s known for high-quality free international calling. Facebook is free. Of the thousands of types of transactions on Craigslist, the company charges for only six of them, and does so mainly as a way to curb abuse.
Free is the future.
De-monetized business models are here to stay. Online, where the cost of scaling a business can be extraordinarily low, companies can afford to offer so much more of their services for free than ever before, thus offering new and creative ways to get paid.
The challenge to offering a free service is one of vision. Founders must steadfastly commit to a radical plan and convince their investors of the same. If a free service is also a useful one, customer acquisition can explode to huge numbers. With huge numbers of users comes huge opportunities to eventually monetize, so patience will be rewarded.
It’s more than Freemium.
De-monetizing goes well beyond “Freemium.” It means that we focus only on offering a useful service and make money as an afterthought, and in some cases we never charge at all. The overriding priority is to offer the best product or service to the most people possible. The service remains free for both casual and power users.
De-monetize B2B Products
Startups can disrupt bigger existing players by offering enterprise-level products for free as well. By offering a free product you bring on more users faster, you get more feedback to improve your service faster, and ultimately you make the decision for a large company to use your product easier. And when your company becomes the industry leader, there’s no doubt you’ll find ways to extract value.
It’s a dangerous path.
This trend towards de-monetizing services can benefit entrepreneurs and consumers in the short run. However, we all know that offering free services will eventually hurt our money-dependent world. Only the best-connected (and already rich?) entrepreneurs will be backed by deep-pocketed investors. How can everyone else compete? And with the internet revealing the true costs of all products, global profit margins are being pushed to zero.
We will soon have to re-imagine ways to allocate goods and services using something other than money.