Yahoo's Earnings Disappoint; Company Insists Strategy Is Working

More People Realizing That Giving Stuff Away Can Increase Revenue

from the about-time dept

Tue, Apr 17th 2007 9:47pm — Mike Masnick

When we discuss the importance of understanding economics when scarcity is removed, one of the key points we've tried to make (though we don't always succeed) is that when companies learn to embrace the economics it actually increases the size of their market -- if they understand where to focus for profits. Unfortunately, too many people seem to assume that this is a struggle between producers and consumers and that if one side wins, the other loses. However, it's not a zero-sum game, and you don't need to focus on "balancing" both sides when both sides can come out as winners. That's why it's amusing to see the NY Times seem positively shocked that an amazingly expensive conference like TED has discovered it can make a lot more money by giving away the videos of its exclusive presentations for free online. They make it out as if it's somehow "counter" to basic economics, but it's not. TED isn't just selling the content of the presentations, they're really selling the overall community that attends the conference, meets the other smart folks at the event and has a chance to discuss and debate the ideas and concepts presented. When you realize that, giving away the videos isn't counter to anything. It makes a tremendous amount of sense, because it only enhances the brand recognition of the event as well as the overall value of attending. In other words, giving the non-scarce stuff (the presentations) away helps increase the value of the scarce stuff (tickets to attend) just like economics says it should.

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11 Comments

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squik, 17 Apr 2007 @ 11:34pm

You are trying really hard
The video increases the value of a scarce product -- attendance at the conference. The video also increases the visibility of ideas presented at the conference, thereby increasing the demand to present at the conference.

In short, the video is advertising. This isn't anything startlingly new. It is very old.
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Anonymous Coward, 17 Apr 2007 @ 11:53pm

Re: You are trying really hard
If you read what he wrote that's what he was saying
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Chris, 18 Apr 2007 @ 12:25am

All hail Squick the obvious, and irrelevant.
This post along with probably 50 others on TechDirt continually point out that allowing someone to advertise for you is to your benefit. It's free, it spreads the word of your product, thus generating interest, and gives it a relevant agent through which the advertisement is delievered. Getting a random popup or spam e-mail is annoying. Going to a site devouted to selling networking equipment and seeing an add for really cheep blade servers is content the consumer wishes to be exposed to. So, if a tradeshow expands it's exposure services beyond the showroom floor, then it's obviously going to have a better turnout; for the vendors and patrons alike.
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Mike (profile), 18 Apr 2007 @ 12:33am

Re: You are trying really hard
In short, the video is advertising. This isn't anything startlingly new. It is very old.

Indeed. That's exactly what I'm saying.
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Overcast, 18 Apr 2007 @ 6:02am

Yeah, It's free advertising. Not just plain old boring TV commercials that make you want to run to the restroom, but it's a FREEBIE coupled with advertising.

Of course it's going to get attention and of course people will respond.

And I do not, of course, expect big old business to ever notice that..
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Luke, 18 Apr 2007 @ 6:43am

Advertising that's useful
This is useful advertising. It would be awesome if more companies followed this line of thought and actually gave their users/consumers something powerful, meaningful, useful in an advertisement rather than just flashy lights and a catchy theme song. I always hate when I to go find information out about some product or event and the official page is nothing but useless advertising without giving me any direct information that tells me what's really going on.

By giving away actual video of the conference you make it easy for someone to see what it is that you offer.
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Casper, 18 Apr 2007 @ 7:24am

Wow
This is one reason I hated dealing with economists in school. Even though they supposedly specialize in the economy, they lack a basic understanding of how trade works or how supply and demand works. In fact, I actually started a small software company back in the day and one of the biggest draws we had was our free software on our website.

Distributing something for free will always generate a positive result as long as the expense of that distributed is of less then or equal return. In the case of software, music, movies, and all other forms of media in which replication costs almost nothing; you can't go wrong.

It's really simple when you think of it as an artificial inflation of demand for products from your company (like advertising - except you are actually displacing possible competitors with your free product).
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Casper, 18 Apr 2007 @ 7:28am

Re: Wow
One more thing: If you have not already done so, you should look into the Pharmaceutical industries methods. They distribute all kinds of free product in conjunction with their advertising and have (according to the last numbers I saw) been getting a 2:1 return... and they sell some extremely over priced products.
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rEdEyEz, 18 Apr 2007 @ 9:23am

Street Marketing 101
Yeah, I learned this tactic back in the 'hood, from a pimp, his hos, and a neighborhood pharmaceutical dealer.

...Once you're hooked, it makes its own sauce.
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Jack Sparrow, 18 Apr 2007 @ 10:37am

Whawtever
Hey mates,

Arrrrgggghhh,

You can do better then this TechDirt mates, sure you can!

These last ones has no so tech even so dirt...

Gone :)
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Buzz, 18 Apr 2007 @ 12:31pm

Amen Amen
I am 1000x more likely to purchase products from Google since they offer so many high-quality programs for free. Google Sketchup is one example that made me giddy once I discovered it. Bottom line is this: those who offer free stuff win tons of support from customers.
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