The Curve - from freeloaders into superfans: the future of business
Portfolio Penguin, £16.99
This book shows us that we should not be afraid of giving some things away for free. The Curve suggests that if you build relationships with your customers and your fans - often by giving away stuff that they value - they will, over time, 'spend lots more money on things they value even more'.
To me, a veteran of the freemium model, the timing of this book's publication feels a little odd. But for those who aren't familiar with the model, this book provides a ton of evidence and in-depth case studies - a direct result of Lovell's experience as a gaming consultant and writer of the popular 'GamesBrief' blog. Lovell, therefore, has unprecedented access to some of the most interesting gaming companies embracing freemium, notably Double Fine, NimbleBit, Supercell and Bigpoint.
There are also vivid examples from the world of pop. Take Lady Gaga's video for Bad Romance. It's available free on YouTube (in fact, it's one of the top 10 most popular music videos) and yet that doesn't seem to have hurt sales: over 9.7 million copies were bought in 2010, making it the second most purchased single in the world that year.
Lady Gaga has said that she doesn't mind her fans getting her music free, whether legally or illegally. Trent Reznor of Nine Inch Nails also understands the economics of free content. He grossed $750,000 from selling 2,500 deluxe editions of an album that was available as a free digital download, was free on file-sharing sites or could be purchased for the princely sum of $5. And then there's Alex Day, who holds the UK record for the highest chart position for an unsigned artist. His songs aren't played on the radio but have been watched more than 100 million times on YouTube, where they are available free.
Examples like these show that it's still possible to make money (indeed, big bucks) in a world where the price of so many things is heading towards zero.
Lovell's book recognises that all businesses, organisations and creators need to develop a direct and emotionally resonant connection to their audiences - not just the 'superfans' but the 'freeloaders' and the 'gawkers' too. The curve is a spectrum: the holy grail is to find creative ways to move people along it. In Lovell's words, you have to 'use the cheap distribution of the internet to start the process of connecting with fans - and then craft products, services and artistic creations for which they will pay lots of money'.
The book also acknowledges the death of the mass market and of word of mouth as a powerful marketing tool, largely uncontrollable by any content creator.
While Lovell calls this a 'time filled with possibilities', the freemium model has sounded the death knell for many staid industries. Some music, publishing and gaming companies are still frantically trying to monopolise consumers' access to entertainment. They will need to go through a massive transition to survive. 'The long battle to fight free content will prove to be pointless ... not because the pirates will win but because the competition will start to discover how to use free more effectively. The real disruptive threat comes from competition, not piracy.'
The Curve also touches on some of the problems with this new reality: ethical issues around monetisation, for example, and the problems surrounding copyright and trademark issues now that everything can so easily be copied and distributed.
There are, however, a few black marks against this book. First, Lovell's assumptions about the 'inevitable death' of the subscription model, which I believe is due a resurgence on mobile platforms (once the platform owners agree to its wider use) and will work among a particular demographic (for example, children). Subscription is a powerful tool for garnering trust with consumers and is open to a variable pricing model. I disagree that it can't be used as a way to push consumers along the curve.
Second, the book assumes that all businesses have superfans, which strikes me as difficult in highly price-competitive industries where the products and services offered are largely undifferentiated. I'm not sure that insurance companies or low-cost airlines have superfans, for example.
Don't let that put you off, though. The Curve is well researched and well argued. It's a must-read for anyone interested in digital disruption and powerful new methods of engaging with customers.
Divinia Knowles is the COO and CFO of online games firm Mind Candy, creator of Moshi Monsters