The panel discusses The Curve by Nicholas Lovell
Last night I had the great pleasure of participating in a panel discussion based on a talk given by Nicholas Lovell, author of ‘The Curve’.
What is The Curve?
Nicholas Lovell has created an interesting theory surrounding the question of how you make money when everything is being given away for free. He mostly works with games like Candy Crush (which is free) helping them to monetize their customers.
In today’s web driven world it has become unbelievably easy to share things. Quite literally anybody can do it for almost nothing, and as soon as someone can figure out how to give away for free what your business is selling, you’ve had it. The premise of the curve is that giving things away for free can actually work as a business model. Free is essentially a marketing strategy that helps you talk to your customers.
Lovell splits your audience into two basic categories. The first group he calls Freeloaders. These people make up about 90% of your customer base and the vast majority of them will never be willing to pay for your product. This is OK though, because freeloaders are important to your product from a marketing point of view; they become the raw material of the second category. If you can prove that your product is meaningful to them, you can move them up the curve and into the second category.
The second segment of your audience are called Superfans and these are the people who will not only pay for your product, but will give you lots of money.
“Let those who love what you do spend money on the things that they value”
– Nicholas Lovell
Superfans will happily give you money in return for things they consider valuable. What you need to remember when marketing this part of your product is that you aren’t just selling the thing, you’re selling the way that thing makes people feel.
As the CEO of a company that gives away its product for free, I found The Curve to be a fascinating set of ideas.
Free has always been a fundamental part of our business model at import. We take something which is free already – information on the web – and repurpose it into useable data. A large majority of our users – or freeloaders as I am now going to call them – are developers and, while they are passionate and love what we do, they are never going to pay for it (devs never pay for anything). The way we’ve made the curve work for us, although I didn’t think of it this way at the time – is to target large organizations as our superfans. We are essentially straddling the line between a freemium B2C model and a paid B2B model.
There was a great question last night about how you sell free to investors as a business model – after all someone has to fund your development. I can tell you from experience that it hasn’t always been easy. Free is not a well established business model in the data sector where companies like Bloomberg are still privately owned and selling data for large sums of money. But, if you want to come in and disrupt the industry – especially a well established one – you have to do something different. We have to give it away for free, we don’t have a choice. We need the free users to help us build a semantic understanding of the web – we are essentially crowdsourcing an understanding of the web – which we can then use to build better data sets to sell to corporates. In my experience, if you can bring investors with you along that journey most of them are willing to accept the free model.
I’d just like to finish by saying a quick thank you to Tech City News for having me along to be on the panel.