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Group 10: Lucas Witt, BD Zheng, Keith Wilkerson, Alyssa Wintersteller.

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Presentation on theme: "Group 10: Lucas Witt, BD Zheng, Keith Wilkerson, Alyssa Wintersteller."— Presentation transcript:

1 Group 10: Lucas Witt, BD Zheng, Keith Wilkerson, Alyssa Wintersteller

2  In the last decade, we have become more used to free online services.  Digital goods have become more popular. Since they can be produced for almost nothing, their price level has gone to zero.  The use of the internet has spurred the invention of a new business model known as “Freemium”.

3  Facebook  Google  Hypem.com-lets users listen to songs posted on music-related blogs for free.  Kayak.com-lets users compare traveling fares from multiple vendors.

4  Picnik.com-free photo-editing site which requires no registration or downloads.  Pogo.com-free online gaming site.  Shopittome.com-compares prices of major clothing designers and alerts you via email when the best price is found.

5  Shift towards free open source software and Web-based productivity tools like Google Docs  The cheapest computers on the market on “Netbooks”, which sell for $250.  They come equipped with either a free version of Linux or a very cheap old version of Windows.  They don’t load Office at all. They load usually free online equivalents.

6 1. Have a great idea. 2. Raise money to bring it to market, ideally free to reach the largest possible market. 3. If it proves popular, raise more money to scale it up. 4. Repeat until you’re bought by a bigger company. Steps 2-4 are no longer available, so online businesses have to find a new business model.

7  Popular services can get by with only a few ads.  Two problems have arisen with this model: the price of the ads and the click-through rates.  Facebook is extremely popular, but extremely ineffective at advertising.  No one is clicking on the ads, therefore Facebook is generating less than $1 per 1,000 views, compared to $20 on big media websites.

8  Already successful businesses, such as Microsoft, are trying to find ways to compete with the free online businesses.  Microsoft has created web versions of its business software and now offers them to small businesses for free.  Microsoft is betting that once these businesses grow, they will continue to use the products even when they have to pay.

9  Even with the current economic recession, free online businesses are not likely to recede.  “Free” is still too enticing a term for people to pass up.  Free may be the best price, but it can’t be the only one.

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