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.
Monday, August 13, 2012
Can Barnes & Noble Make "Freemium" Work?
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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