Board of Innovation » free

e-shop: Swap products for products

Nick — Mon, 31 May 2010 17:27:36 +0000

It was only a matter of time before somebody started a concept like Flip4new. The German e-commerce site focuses on electronics and digital products. That’s not new of course. But there payment method is. Instead of paying with cash, credit cards and so on, customers can pay with other goods. If you need a new iPod, you might pay with your old Nintendo Wii console. The business concept of this e-commerce platform is different from others due to the broad offering they have. Other ‘swap’ platforms are focused on one product or one niche only. For instance, give your old mobile in return for a new one.
In this case, you send in your product and the discount you get can only be used on the same platform. Soon we might see concepts were you can exchange your discount-credits (if that’s a good name) with other platforms as well. A ‘Pay with facebook‘ concept will soon arise. Secondly, people will elaborate on the idea of paying with products. Now only ‘old’ products are being used, but what about products that are being ‘modded’ or ‘hacked’ to become better products then before. A whole D.I.Y. generation is entering the e-commerce scene and they will definitely leave a stamp on the way we look at (online) trading.

A Free Disney experience in exchange for volunteer work

Nick — Sat, 10 Oct 2009 12:07:37 +0000

Many free business models are based upon advertising while others are based on direct exchange of services. You do something for me and in return I’ll do something for you. Everybody happy! This new approach by Disney combines both methods. In order to get free publicity they are encouraging people to do volunteer work with the Handson Network. When someone gives a few hours of his precious time to such a good cause, Disney will give that volunteer a free visit at on of its theme parks. Visitors of Disney Land or Walt Disney World will admit that this is truly a unique experience. The return Disney receives is off course a better reputation and that without the need to spend big advertising budgets.While more and more charity based business concepts do pop-up, we see that only few of them use it in this fundamental new way. Most of the time a company only promises to donate a part of the profit to charity. By doing this they hope to convince people to buy more goods. All the ‘RED’ products use this method: Charity as a sticker. But in this Disney case there is no direct money involved and that is not a problem at all! Disney is a marketing company, one that sells brand reputation. So anything that can strengthen their reputation will be directly linked to higher profits elsewhere. If you’re a simple product seller you can’t rely directly on such a concept since you don’t have other revenue streams. Maybe in that case a ‘Buy one, give one’-concept will be a more sustainable way of using ‘charity’.

Irehab.com: Let doctors pay to give you health care

Nick — Mon, 17 Aug 2009 21:06:30 +0000

The new start-up Irehab.com tries to take a different approach to health care. Patients can get free advice on how to treat specific complaints. By answering a few questions and looking at several 3D animations, these users should be able to diagnose themselves. To treat for instance ‘back pain’ they can follow step-by-step instruction videos made by physical therapists but personally selected by external doctors to fit the needs of that specific patient. The first 10 consults are free of charge, both for the patient and the doctor. On the platform itself, they will have a private area where they can keep track of the results. After the first 10 consults the doctors will have to pay $0.99 for each patient that they want to follow up in the future. For further advice the patient will have to pay a fixed nominal fee per month directly to the clinic or doctor. On average this fee will be around $9.99. The only money that Irehab.com” receives will be the $0.99 per month, so they will need a large database to make this Freemium concept profitable. Within a few years it will be common practice that people will diagnose and monitor themselves without the hassle of expensive expert consults. Many companies are looking for ways to monetize this evolution. Google Health and Microsoft HealthVault are only a few of the large group IT services that are around these days. But also beyond the normal web experience we see these experimental concepts. Recently Apple presented the Lifescan’s New Diabetes iPhone App that communicates with a seperate glucose monitoring device. The latter works similar as the VirtuaGym concept we presented earlier. There people could monitor their offline exercise habits to benchmark these with other peers online. This D.I.Y. health care market is nearly unexplored so you may expect a boom of new concepts and ideas in the coming year. Many of them will fail but some of them will change the way we look at health care forever.

A non-advertising based Free business by TruGenetics

Nick — Sun, 21 Jun 2009 19:33:54 +0000

TruGenetics understands that the value of genetic profile analysis lies in the combined data of a large group of people. Therefore they decided not to charge their users for individual genome reports in contrast to several competitors. During the first phase of their business, the company will offer this service for free to at least 10.000 users. These people will be asked to send TruGenetics detailed profile information together with a salvia (spit) sample. In exchange for their support, users will receive a service in return in the form of a detailed personal genome report. For Truegenetics all this data will hopefully lead to new findings in phenotypes that could be used to patent new products. Such products can then be sold to biotech, pharma and medical companies. If nothing comes out of this expensive research, they could still sell the data, but this will not be the main goal of the company.

This is a good example of a free business concept that doesn’t rely on advertising or charging premium users. By means of crowdsourcing, they build up the true value of the company. The service for service transaction in their system is also remarkable. The service Trugenetics offers to its users is so personalised (what is more personalised then your own DNA?) that more then enough value is created to encourage people to participate. For many it will even be an unique experience to be part of this global research program that could be beneficial for society one day. Overall this concept shows us once again how consumers are evolving when it comes to privacy and how this creates potential to all sorts of health 2.0 businesses.

Timebridge: In-App Commerce to Challenge Advertising

Philippe — Sun, 07 Jun 2009 22:03:28 +0000

As previously described on In-Game Selling, companies are moving from advertisement based revenue models to in-app commerce or in-product selling. Timebridge.com is an excellent example of the same principle. Timebridge offers a scheduling service enabling people to collaboratively determine when to meet, also on mobile. Their actual revenue model is the resale of online and phone meeting services. This is not a freemium model, as Timebridge does not sell a premium of its own product. It is not an advertising business model either, since Timebridge is not earning on selling its users’ attention to advertisers. Timebridge’s business model consists of offering its users a free service that serves as broker platform to resell 3th party (meeting) services with commission.

A lot of free products and services go with a freemium or advertising strategy, but advertising is not sustainable for a number of reasons. In-app commerce, or broader, in-product selling is there to challenge advertising. Micro-payments will be a crucial facilitator in getting consumers to actually paying for content again, in times where people are used to free and ad-supported. Like Timebridge, in-game selling, blogs with jobs/widgets/affiliate programs… can your product or service offer a channel to sell and buy things? Sales people earn more than advertisers, don’t they?

Taatu and Virtua Gym on Pitcharena.com

Nick — Fri, 05 Jun 2009 15:43:37 +0000

Following our previous post on wantz.it and tweetag, two other social applications that presented during Pitch Arena were Taatu and Virtua Gym. For these two ventures we also briefly described their business model. We didn’t go in depth, but mapping out the four social applications gaves us the possibility to quickly compare them with each other. Taatu is already active for several years and relies on a more complex business model than Virtua Gym.

Taatu

Taatu relies on two big revenue loops in their business system. First of all they offer a 3D chat experience to their user base, an active crowd of youngsters. The attention of this group is sold to advertisers who can create branded content and events inside the 3D world of Taatu. Another stream of revenue comes from many small micro-payments inside their virtual world. Users can buy virtual items that will extend their community experience. Also, the users of taatu can create goods that others can buy, which leads to a virtual economy. Different to other virtual economies, the virtual currency can’t be exchanged to dollars. Money can therefore only be transferred from the users to Taatu company.

Virtua Gym

During their 8 minute pitch shown below, the two brothers behind Virtua Gym describe the different business models that they are using. Since they are still in a very early stage, it difficult to determine which part of their business concept will become their most important revenue stream. Once they have built up their service towards gym users, they will have an interesting user base to sell to niche advertisers.

This leads to a typical free advertising based business model where the basic service is offered for free in exchange for advertising. Many online services try to rely on this business concept but only a few of them manage to become sustainable. A large user base, even in a niche topic is vital to attract large advertisers. Therefor Virtua Gym is working to add an experience on top of their service where users can have an off-line but real-time sport competition against other people.

Pitcharena.com: How to make money online via social apps? 2/4

Nick — Tue, 26 May 2009 20:56:20 +0000

During the most recent edition of Pitch Arena, we presented our business model framework to the entrepreneurs and start-ups that were present. The concept of Pitch Arena is rather straight forward. Several start-ups present their new venture to an audience of innovators and technologists in order to get valuable feedback and meet interesting people. We didn’t pitch our platform but fueled to the Q/A session with our view on the business models of the 4 presenting start-ups. With the theme of this Pitch Arena being ‘Social Applications‘, we clearly distinguished four different models being used. Let’s have a look at two of them today.

Wantz.it : dowant!

Wantz.it offers a simple wish list service to their users. People can easily submit products and services they wish to receive to their list by tagging web pages via twitter, facebook or via their own wantz.it page. Then Wantz.it gives those users different means to actively spread/expose their wish list to their friends. When such a friend decides to buy a gift after clicking on an item in the wish list, a part of the money will be sent towards the wantz.it company as a form of commission.

Tweetag : Twitter clouds!

Tweetag‘s social app gives users the possibility to create specific tagclouds. The first part of their service is a form of donationware. When used in a non-commercial context, Tweetag asks for a donation fee. The biggest revenue is planned to follow from a second revenue stream though, as commercial companies will be charged when adding a cloud on their web page. While there might be limited value in knowing what everybody is talking about, it could be very interesting to see what a specific group of people is saying. A newspaper for instance could wish to add a tweet cloud to give their readers insight in what a selection of politicians is tweeting all day. By doing this tweetag creates value.

What To Learn From Blyk.com: The New Free Mobile Network

Philippe — Mon, 13 Apr 2009 14:15:53 +0000

Blyk.com is a free mobile network for youngsters. Blyk.com sends you messages from your favourite brands – targeted on your profile – in return for free minutes and text messages. The target age group of 16-24 year is rather hard to reach, which makes it an attractive offer for advertisers. The start-up launched about one and a half years ago in the UK, and has a base of 200,000 users now. Building on that success and backed by €70 million of investments, the start-up is currently expanding its business concept into the Netherlands. Unlike in the UK where they build up a complete telecom operator, they will partner with existing telecom providers to roll-out faster in Europe. In the Netherlands Blyk is partnering with Vodafone, and has already lined up advertisers from the travel, music, sports and film industry.

Blyk’s free business model is based on an advertisement revenue model generically similar to free newspapers, Google, and free online games. Where traditionally customers pay with ‘money’ for a mobile service, they can now pay with ‘attention’ to an advertising company, which in its turn pays the mobile service provider. Although FREE has been quoted as the most misleading business concept in the world by some, the speed and magnitude of new FREE initiatives should focus our attention on the following questions: which free start-ups are entering my industry? What if I made my current primary transaction free, on what other offerings could I earn money (services, ads, premium offer…)? Even if free is not sustainable at this moment in your business, it is an excellent brainstorming method to generate ideas about new value propositions and revenue streams in your industry. Just remember… the best way to avoid a war is to be prepared!

Business Models: Plugg Start-up winners Mendeley & Myngle

Philippe — Thu, 12 Mar 2009 20:35:45 +0000

Today, European internet entrepreneurs, investors and bloggers gathered on the Plugg 2009 conference to look at the ‘new web’ and its future. One of the key elements on Plugg is the Start-ups Rally, a pitching competition where 20 start-ups present their business to the audience and a challenging jury of investors and thought leaders. Let’s have a look at the business model of the 2 winners!

Mendeley.com: Last.fm for research

The overall winner was Mendeley.com (congratulations!). Mendeley positions itself as a “Last.fm for research”. They offer a free social application for managing and sharing research papers, in combination with a web 2.0 site for discovering research trends and connecting to like-minded academics. Mendeley is a typical example of a free business model (subcategory: Freemium). When you sign up, the social app and service are completely free. While the existing features will always remain free, Mendeley plans to introduce new features in the future and make them available to premium users for a fee. Conclusion… Free + Premium = Freemium business model.

Myngle.com: The new way to learn languages

The crowds’ favorite at Plugg 2009 was the new study platform Myngle.com. This online platform offers a relative new way to learn languages by bringing together teachers and students from all over the world. Looking in our database of business models, you see that Myngle relies on a typical Broker model similar to eBay or Zopa: bringing a traditional business to the online mass market. The students pay a fixed price per lesson to a teacher. Myngle charges 18% commission on the transactions.

As such, Myngle brings a successful, existing online business model into a new market. Other start-ups like LiveMocha and Linkua offer similar services, but Myngle differentiates itself by asking students to pay 300-400 EUR upfront for lessons to ensure continuity of taking lessons (not stop after 1 lesson). Myngle has a revenue stream of 20,000 EUR per month growing steadily.

Free, the most misleading business concept in the world

Nick — Sat, 07 Mar 2009 13:43:40 +0000

One of the first business models that we will add to our business model catalog will be that related to the ‘free economy’. The concept of ‘free’ has already disrupted a number of industries, and no doubt other industries will follow soon. The book industry will probably be one of those, as youngsters are already used to read texts on small screens. In addition, we see the uprise of many E-readers like Kindl. The mixture of both trends, backed by large organisations like Amazon, will create momentum and disrupt the traditional publisher based model.

Discussions on the free business model

How the publishing sector will cope with the upcoming change is difficult to tell, but we can look at other successful examples seen in the last years. The Free! Summit with Chris Anderson will be held in a few weeks, and will go deeper into this topic. Some of the following key questions have already started the discussion:

How is free changing consumer expectations, and vice versa?
How can free be part of a sustainble business model?
When the price is zero, what else do customers value?
Is free a threat, or a boon, to intellectual property?
Are there other ways free pays off?
What about the social benefits?
Where is free headed to?

Harold from Stuff Channel made the following statement:

Free is the most misleading business concept in the world, because it is predicated on giving something the appearance of value by actively devaluing everything else around it.

Problems? Now many bands give away free music so that people will attend their (still profitable) music events. What happens when some bands start playing free concerts just to sell T-shirts? Will they devalue the concert experience enough to lower the value for everyone? What happens when a band gives away T-shirts and concerts just for a share of the concession stands? It doesn’t end because the concepts of “free” continue to encourage end users to think of things as having no true value.

Free is never free, but it expects a whole bunch of people to work for nothing. Web2.0 is already leaving the building, hopefully free will go with it.

The ongoing discussion on Techdirt as a response to Harold gives an indication of how this business innovation will continue to shake several industries. Whether the outcome will be positive or negative, is something only the future will tell.