Monday, August 13, 2012

Can Barnes & Noble Make "Freemium" Work?

Barnes & Noble and Amazon do not use a pure "freemium" model in selling their tablets and e-readers. A classic freemium strategy would entail giving away the product for free, then building revenue on ancillary products. 

On the other hand, lots of observers believe that Barnes & Noble now is selling some of  its tablets for less than production cost. The logic, which mirrors Amazon's strategy of selling tablets at cost, or perhaps slightly below cost, is that seeding the market with lots of devices creates a bigger platform for selling content. 

Many criticize Amazon for that strategy, but it seems to work for Amazon. Amazon "probably makes enough money from that business to subsidize e-reader losses," argues Douglas McIntyre. 

The issue is whether Barnes &Noble can do the same. It's not exactly a classic freemium strategyk, but is quite similar in principle. 

No comments:

Which Firm Will Use AI to Boost Revenue by an Order of Magnitude?

Ultimately, there is really only one way for huge AI infrastructure investments up by an order of magnitude over cloud computing investment ...