공짜 경제에서 어떻게 돈을 버는가?(how to make money in free economy)
TRANSCRIPT
공짜����������� ������������������ 경제에서����������� ������������������ 어떻게����������� ������������������ 돈을����������� ������������������ 버는가?(How to Make Money in Free Economy)
2015. 4. 6.
Prof. Sangkyu RhoGraduate School of Business
Seoul National University
http://www.slideshare.net/srho/how-to-make-money-in-free-economy
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
Who’s Sangkyu Rho?
• Profession: – 서울대����������� ������������������ 경영대����������� ������������������ 교수����������� ������������������ since 1995– 서울대����������� ������������������ 경영대����������� ������������������ MBA부학장����������� ������������������ from 2013 to 2014– Blogger since 2013
• Interests: – Data & Knowledge– Social & Network
• Contacts: – [email protected]– www.organicmedialab.com – Facebook: sangkyu.rho– LinkedIn: Sangkyu Rho– Twitter: @srho77
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
How to Make Money
Google, Amazon, Facebook, …
• 0.000…1 × ≈∞ = Big Number
Reality
• 0 × ? = 0
Solution
• Revenue (Monetisation) Model: What part of product/service to charge to whom, and how?
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“Information wants to be FREE”
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EconomicZero marginal cost (MC=0) All Information
No value at all in some cases SNS with 0 users
SocialFree sharing Wikipedia
Free copying Piracy
Psychological Free as anchor prices Free app vs. $1 app
Strategic Free as weapons Kakao Talk
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
How is Free Possible?
Cross Subsidization (교차보조)
• Someone is paying for me.
• “There ain’t no such thing as a free lunch!”
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Cross Subsidization
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To From Example
Free Product Paid Product 미끼 상품 (Loss Leader)
Free Now Pay Later공짜폰, 무료 체험(Free trial),
부분유료화(Microtransaction) 게임
Free Users Paying Users Freemium(Evernote), Pay What You Want (Radiohead)
Free Side (Party) Money Side (Party) Traditional Media, Google Search
Free Market Non-monetary Market
Gift Economy (Wikipedia, Linux),Barter Economy (Google 411)
http://organicmedialab.com/2013/04/30/there-is-no-free-lunch/
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
Free as a Strategy
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Free(무료)
Money(유료)
Experience (체험)
Network Effects (네트워크 효과)
Reputation (평판)
Scale (규모)
Device/Platform (기기/플랫폼)
Consumption (소비)
Attention (방문)
Organic Media Lab, 2015
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
Information Goods(정보재)
Anything that CAN be digitized:
• News, Music, Movies, Books, …
• Operating Systems, Productivity Software, …
• Social Network Services, Market Places, …
Value not in the container but in the contents, … and contexts
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3 Components of Media
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http://organicmedialab.com/2013/03/21/3-components-of-media/
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정보재의 특징
Marginal Cost (MC) of Information is 0
Information is Soft
Information is Experience Good
Piracy of Information is Inevitable
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Issues in Information Goods Transactions
How to package information goods
How to price information goods
How to promote information goods
How to manage intellectual property rights
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Free or Not for Free?
Free as a Strategy
Value-based Pricing
Versioning and Bundling
Help from Potential Customers
Maximizing User Experience
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Marginal Cost of Information is 0
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Quantity
Tota
l Cos
t/Rev
enue
Cost of Information Goods
Cost of Physical Goods
Revenue
Q*
Organic Media Lab, 2013
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
Implication of MC = 0
Free version
Unlimited supply
Economies of scale
NOT Cost-based approach, BUT Value-based approach
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Value-based Pricing
Forget cost per unit when MC=0
Focus on value (revenue) maximization
Learn users’ willingness to pay by experiments
• Versioning & bundling
• A/B tests
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Economics of Versions and Bundles
Goal: Value Maximization
Price discrimination [Pigou, 1920]
• Personalized pricing (Perfect)
• Group pricing (Direct)
• Versioning (Indirect)
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Quantity Demanded
Price
10,000
20,000
10,000 20,000
Organic Media Lab, 2013
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
Versioning
Different versions for different market segments
• Offer versions tailored to the needs of different customers (e.g., quantity, quality, functions, capacity…)
• e.g., Cable TV, Freemium (Free + Premium versions)
• How many versions?
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Quantity Demanded
Price
10,000
20,000
10,000 20,000
Organic Media Lab, 2013
Group Pricing
A different price for each group (e.g, Student versions)
Why?
• Price sensitivity
• Network effects
• Lock-in
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Personalized Pricing
A different price for everyone
• Know your customers
• Personalize your product
• Differentiate your prices when possible
e.g., Google Adwords
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Quantity Demanded
Price
10,000
20,000
10,000 20,000
Organic Media Lab, 2013
(CC BY-SA 3.0) Sangkyu Rho, SNU Business School
BundlingA special form of versioning in which two or more distinct products are offered as a package at a single price. (e.g., Microsoft Office, Amazon Prime)
Bundling increases the value extracted from the customers by reducing the dispersion in their willingness to pay
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Word ExcelCheolsoo 150,000 100,000Younghee 100,000 150,000
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Revenue ModelsPackaging
• What to pay for
Payer
• Who’s paying?
Pricing
• How (much) to pay
• When to pay
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Revenue Models of Music
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Packaging Payer Pricing
CD 10 songs Consumer $ 10/CD
iTunes 1 song Consumer $1/song
Melon All you can eat in a month Consumer $5/month
Spotify All you can eat Advertisers $15 CPM
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Packaging (Versioning)
Fragmentation
• Individual songs (Apple iTunes)
• Microtransaction games (Nexon Maple Story)
• Selling the parts (e.g., Ringtone, Amazon AWS)
Versioning
• Freemium (Evernote, Hulu, even Microsoft Office)
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Packaging (Bundling)Bundling
• Office Suite (Microsoft, Google Apps)
• All You Can Eat (Netflix, Spotify)
• Mixed Bundle (Amazon Prime)
Extension
• Add service (Apple iPod + iTunes)
• Add product (Amazon Prime + Kindle Fire)
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PricingSubscriptions
• Video rental subscription (Netflix)
Rentals
• Kindle Owner’s Lending Library (Amazon)
Dynamic Pricing
• Auction (Google AdWords)
• Pay What You Want (Donationware)
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3rd Party Payer (Advertising)Container:
• Newspaper — TV — PC — Mobile
• Text — Image — Audio — Video
Contents:
• Commercial — Infomercial — Information
Context:
• Irrelevant/Independent — Keyword — Social Network — Location — Activity — Intention
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3rd Party Payer (Advertising)
Performance:
• Impression — Click — Sale
Participation (Mediation):
• Passive — Interactive — Active — Money Making(?)
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3rd Party Payer (Sponsorship)
Product placement
Contents sponsorship
Crowd Funding
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Recommended Readings
Chris Anderson, Free, Hyperion, 2010.
윤지영, 오가닉 미디어, 21세기북스, 2014.( http://organicmedia.pressbooks.com)
Shapiro & Varian, Information Rules, Harvard Business School Press, 1999.
Saul Berman, Not for Free, Harvard Business Review Press, 2011.
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