Can Giving Away Things For Free Make You Rich?
How can giving away things for free make you rich? That does not appear to make any rational sense and yet Nicholas Lovell, in his new book ‘The Curve’, shows us that more and more people are doing just that. For most of us giving away products or services for free is a scary prospect but The Curve seeks to dispel this fear by understanding that the challenges and opportunities presented by the Internet, as well as by new technologies such as 3D printing, can actually be addressed by something as old as the hills: the power of relationship.
Insights from someone in the know
Nicholas Lovell is a thought leader within the gaming community (check out his blog GAMESbrief) and has spent years advising people on how their businesses can embrace the Internet in order to grow.
In ‘The Curve’ Nicholas draws upon his personal experience, as well as highlighting a myriad of examples across various industries, to demonstrate how the world of business is changing in the face of the Internet and new technology. This revolution – which has already had a huge impact upon music, publishing and gaming – is increasingly affecting every sector of work.
The challenge we all face
Markets are fragmenting and polarising into the very big and the ultra niche. Business is moving from high volume and low cost production to tailored services that are powered by relationships and variable pricing.
We all now live in this altered (and rapidly changing) world but what relevance does crowdsourcing or the Lean Start-Up have to your or my organisation? What’s more how do we survive in a world where there is so much choice online and so much of what is available is for free?
The freeloader conundrum is a particularly big one in the age of the Internet. Having developed businesses online I have first-hand experience of the fact that many people want things for free (and let’s face it, the majority of what I do on the internet is looking for free information so I can’t complain!) The big ‘but’ is that some people, if you can connect with them, are willing to pay a lot of money for whatever it is you do or produce. And that is very good to know!
The rise of the Superfan
This is the point that Nicholas makes. In the age of billions of people accessing Google and Amazon you have to do something rather counter intuitive. Rather than trying to create something for everyone and pushing to the masses, it is your elite band of followers – your ‘Superfans’ as Nicholas describes them – who are the people to concentrate on. A small number of these can drive your financial engine. It is applying the Pareto principle (the 80:20 rule) to your customer base; identify where the majority of your revenue is coming from, drill down into that and cut away the rest; à la Timothy Ferriss.
I have seen this work for many people and one example (not in The Curve but who sprang to mind while I read it) is Pat Flynn, author of the Smart Passive Income blog and owner of various niche sites and online businesses. Pat effectively stumbled into online business after being made redundant but his amiability and relationship building coupled with his work ethic and ability to produce great online services has made him very successful. He is proof of much of what Nicholas writes about. Pat has developed a solid base of ‘Superfans’ who not only buy his products but who also promote what he does and help his fan base to grow.
What have people done to be successful in getting Superfans? As Nicholas points out it is not cheating Google algorithms or even necessarily having the best product or service. Primarily what they have done is to develop relationships off the back of producing good free online content. The good exemplars of this such as Pat Flynn make people feel like they know him even if they have never actually met in person. The key is creating an emotional bond, something that feels one-to-one, even if it is actually just a virtual friendship.
“Sharing is easy but finding an audience is hard.”
Knowing this is critical to good business. We all like to think we are very rational when we make decisions, and logic does play an important part in planning and thinking, but we often forget the power of emotion in decision making. We may have a list or plan regarding our future partner or the house we want to live in but it is an emotional connection that makes us fall in love with someone or somewhere. It is that emotional connection that clinches the deal and we should not think that something of this emotion is removed from business transactions (just ask a lady buying a pair of Jimmy Choos!) As Nicholas observes:
“Value lies in the way something makes us feel”
Different customers will have different levels of emotional investment in a product or service and people will pay more for something they really care about. Nicholas demonstrates the natural development of this idea is to make sure products and services are tailored to individuals and people can effectively pay what they want to because they are given a range of options from free to premium.
Should you read The Curve?
The Curve is a great read. The evidence for the market change is hard to dispute, the examples Nicholas uses are compelling and the advice for embracing the change is easy to understand. There are applications for everyone on how they can utilise the ideas in The Curve from the artist to the lawyer, the manufacturing company to the charity.
I am already thinking of improvements I need to make in my business to embrace concepts in The Curve. I would encourage you to read the book and do the same! You can click on the picture below for your own copy.