The Freemium-Premium Puzzle
The more time I spend thinking about the value of information, the more I found that digitalizing information significantly changed the 'information markets', potentially in an irreversible manner. The graph at the bottom outlines my current view.
The existing business models tend to be the same in the digital and analogue information world, i.e. revenue is derived from a combination of consumers' payments and advertisement. Even monetizing 'meta-information' such as search engines isn't new. Just think of the once popular 'Who'sWho'.
What really changed is the price-value ratio. The curve is pushed down, closer to the axis. You pay less for the same, or often even get more for less. If you recall the capabilities I described in relevance of information you will see that there are many additional features available for digital content compared to analogue content. I think this is a good 'blue ocean strategy' by combining existing capabilities in a new way. (Kim W.C. & Mauborgne, R. (2005) Blue Ocean Strategies. Boston: Harvard Business School Publishing.).
In addition the different channels of digital information distribution significantly change the value of information. I will touch on this in one of my next blogs.
Right now, many information providers started to offer 'freemium' content through digital channels, hoping to get a premium for the 'full' content. No freemium seems to take them out of business, because they are apparently no longer visible in today's most relevant channels of information consumption. But, the more freemium is provided, the lower the premium gets; a truly puzzling situation.
To make it worse, channel providers increasingly regard information as a value adding and differentiating activity. Maybe new types of exclusive, strategic alliances will solve the puzzle, introducing new types of 'gate-keepers', which - to me - somehow does not match the spirit of the WWW and the generation Y's perception of information consumption and exchange.
