If you're a "free" play, the deal is that you need "free" users. They're not freeloading, they're your path to profitability. Said another way, advertisers don't want you unless users want you. So, free users are actually your company's TOP asset. Eureka!

I swear I never get to come off smart on my blog because I'm too busy highlighting the obvious. (Sigh). And this post is no different.

This advice does not apply to technology companies that sell software, hardware or consulting services, because that quid pro quo is very defined--and there's actually no "free" involved (i.e. "I'll give you this computer and you'll give me this amount of cash").

But it absolutely applies to "free" tech plays (or companies who use new media to run their businesses). You know, companies who offer free tools, content, features, widgets, wikis or otherwise. Because these types of companies--some are 1.0 like with free content, many are 2.0 like with social media tools--need free offerings so as to lure and build traffic...in order to monetize said traffic.

After all, they have employees to pay, servers to run and a host of other expenses.

It also applies to tech plays that have both free and premium-based models. MarketingProfs has two levels of content and I value/use them both. Slide.com is just a nifty and remarkable player that I've spent hours fooling around with. I also enjoy both the free and paid-for rockin' services of Animoto--and when enough users balked, they added the feature of uploading their vids to YouTube (thank you for listening and acting ;-).

Twitter is a great tool due to so much of my network being on it, and so many lessons learned through the conversations. But the technology is so unstable--and the communications from management so precarious--that it's no longer a beloved brand. And Facebook lost my face due to putting advertisers ahead of users with the innovation-that-was-actually-an-intrusion called Beacon. (Yes, I know, much of Beacon is gone now. Problem is, so too is my trust).

So, what's the solution?

Well, it's more realization than solution. More companies need to realize (Eureka!) that free users are not just "users getting a deal because we gave them value through our free whatnot" but--due to the users' providing their content, eyeballs, time, and bringing more users via their networks and WOM--they actually equate to the company's revenue stream.

Yes, the advertisers fork over the greenbacks. But they only do so to gain access to audiences that they value. So since they value those eyeballs, tech plays need to as well.

If more companies understood and relentlessly ran their businesses by this very basic, if all-too-pivotal notion, then suddenly (Eureka!), more companies would treat their users, communicate and respond to their users, and place the relationships they build with users...as their number-one priority.

Kinda like "It's the free users, stupid."

They'd realize that it wasn't the market who was fortunate to get free tools but (Eureka!) it's the company's good fortune to have users who care about their tools (and who, in turn, bring more users). Then every decision would be guided by the yardstick of "How does this new feature, ad model or otherwise work to engage, delight and grow our user base?"

(Because in delighting and growing your user base you are at once growing your revenue stream.)

Plus, once you've built and maintained your user base, then advertisers, sponsors and financiers will court you--as they had their "Eureka!" moment long ago and know how valuable those "free" users really are. Just ask any Exec in broadcast television, radio, media publishing, magazines, etc, etc, and so on.

Comments

[Cam Beck]

Advertisers viewed Beacon as the point behind all of these social media apps, which, IMO, shows just how clueless we (generally) are.

Got their eyeballs? Check.
Got their interests? Check.
Spam the hell out of them? Done.

This might turn into a post. Check with you soon.

[Lewis Green]

Put another way: Smart businesses always put people first, ahead of profits and revenues. When they do, profits and revenues will exceed expectations based on goals measured only in revenue. Good post, CK.

[Connie Reece]

Amen! I've lost patience with Twitter users who tell me I should not complain about the service being down. "After all, it's free," they say. And I reply, "So?"

Twitter will remain free, not able to attract advertisers, if they run all of us loyal users off. We have been evangelizing the heck out of Twitter for months and months, and now I pray not to see the Fail Whale every time I do a live demo.

[Doug]

couldn't agree with you more on the twitter and facebook issue, sad but true