Selling by allowing others to “give freely”

Saturday, October 20, 2007

I’d like to improvise on the notion free through “giving” or “giving freely” in the realm of some recent product announcements. I believe that this could have an incredibly powerful influence on the notion of “sustainably free” when properly built into or leveraged in a business model. After all, religious institutions have often times been the wealthiest enterprises and often solely through the tithing and the benevolence of their devotees. Why? Perhaps it the service they provide their people or the sense of wellbeing their constituents receive when they give. There are many reasons and I won’t belabor this point as it has surely been pondered and debated sufficiently for both the religious and the NGO institutions that exist primarily off of such benevolence.

What interests me rather, is the commercial “for profit” world as well as its intersection with that of the NGOs. I’m particularly intrigued by commercial entities leveraging similar approaches as a means of running a successful business in the for profit world.

When we buy something we normally attribute a value to the item and we are usually willing to pay the associated or reasonably “demanded” price. Tipping is an exception here, also not for this post and also a fascinating area with intriguing human behavior associated to it as well. There have been some very interesting studies on tipping as well.

Two relatively recent announcements are the source of my writing today:

  1. Radiohead’s new album In Rainbows (see New York Time’s commentary)
  2. The prelaunch of controversial “One Laptop per Child” (OLPC); now coming to us as the “XO” via their “Give one Get one” campaign in the USA (see David Pogue’s commentary)

The debate around distribution of digital media just got a bit more interesting this month with Radiohead’s decision to make their new album available for what “you decide” is the right price. I find their move both daring and delightful. They’ve cut out the distributor, are self-releasing and self-promoting and the big thing is that they let you decide how much you want to pay for the album! Many have been paying nothing and many of been paying several times the “normally attributed value” for the new album (the following opinion piece from New York Times covers nicely).

This is cool and my money’s on the fact that assuming the music’s good and enough fans are able to hear about it, they will in fact succeed in making more money this way than through their previous engagement with the record company.

For the soon to be shipping XO (cute name for an American audience, not sure what resonance this will have the intended users but read on as they aren’t paying for it – so who cares if they like the name…). The XO, also known as the “$100 Laptop”, got all its hype through its founders making a great deal of noise about the arbitrary price point of $100. Today it’s going to cost nearly twice that at $188 and you and I have the option of buying one for 4 times the originally stated goal! Utter and complete brilliance! The concept is for a 2 week period (note the impression exclusivity and possible scarcity) folks in the US can buy an XO for $400. You will receive one XO and one XO will be given “for free” to a deserving child in a developing nation world. If this works our XO friends may still make good on their existing government contracts set at the original $100 price point, perhaps make a profit and perhaps “do good” with your help – that is assuming you believe that young 3rd world children actually need laptops.

Remember I said improvise and I realize that I make a few assertions which are lacking firm substantiation, however time will tell in each case if Radiohead can make some money selling their new album and the XO will find a way to enter the 3rd world at a reasonable price (who knows maybe even the first world will enjoy the XO as this does look like a very cool gizmo which strangely enough is just in time for the holiday season…). I’m guessing that both will be wildly successful

For me, the crux of the biscuit (Zappa) lays in each offering providing me the buyer with a sense of empowerment. They allow me to “bestow goodness” upon someone else through my purchase. In each case there is a call upon a higher motive, not just the music and not just a new laptop for my own needs (I’ll be curious to see how many of the $400 Laptops are kept by the purchasers or actually donated as well). By making me feel both powerful and good I may willingly support each. There’s a notion of “free” here, but is it sustainable?

Michael