Paid vs Free Business Models In The Digital Space: Which Is Better?

Is this really even a debate? We all know how much us Indians love free things. But when it comes to monetizing through digital medium, which strategy will reign? Paid will obviously get money but then how many buyers will there be? Free will have more than enough users but at least a certain percentage of those users should be willing to pay for the services or else “Freemium wont really be premium”. So what should be ideal?

Mr. Tarun Katial, CEO, Big FM, says that the main game in today’s time is free entertainment with a lot of advertising. This assures participation by a large percentage of customers and the brand / companies will reach their target audience effectively as well. Mr. Harish Dayani, Chief Executive, Moserbaer, bolsters Mr. Katial’s point by stating that in India there are two blocks of people; one that pays while the other doesn’t. According to Mr. Dayani, India buys more motorcycles and cars as compared to original DVDs. He adds that the best form of monetizing will be through content that can be accessed but not consumed.

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Mr. Paritosh Joshi, CEO, Star CJ Network India Ltd., has a different outlook on the issue of free vs paid. He believes that the device through which a brand advertises to a consumer should be used as medium to create transactions for goods and services directly. This means that a youngster playing a video game should have the option of purchasing the new version of the game through his hand-held console itself. So though the consumer, in this case a youngster, is not charged for looking at the new version, at the same time he has the option to buy the game if he is satisfied with the advertisement.

Conclusion

Free business models will not help its paid counterpart in any way. Why will a customer pay for something when he has the same available to him for free? But in the case of free business models, it might take some time to rake in the money as it all depends on how fast the word spreads and how many of the users actually end up paying. In the case of paid, the inflow of money might be quicker. According to the expert panel, the free models, or disruptive models, will be better in the long run. What do you think?

2 Responses to “Paid vs Free Business Models In The Digital Space: Which Is Better?”

  1. August 3, 2010 at 3:02 pm #

    Agree completely……We as Indians are happy using a service/product as long as it is free. Levy even a nominal charge and the indian mind would start doing calculations whether he really needs it.

    Consider this scenario, we all listen to radio happily everyday on way to office,etc and enjoy it loads. But the moment any one of the service providers would think of making it a paid service, there would be a drastic reduction in radio listeners.

  2. March 16, 2012 at 4:50 pm #

    An impressive share, I just given this onto a colleague who was doing a little similar analysis on this. He in fact purchased me breakfast because I discovered it for him.. smile.

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