Amazon Prime isn't free shipping (as far as I know >$25 standard shipping is still a thing). It's a flat rate for unlimited 2 day shipping. Two day shipping is expensive, but the combination of an annual fee and the increased likelihood of purchases for subscribers is good for Amazon's bottom line. Subscribers get faster shipping and pay less as long as they order more than four or five things a year. It seems like a pretty decent win for both consumers and Amazon. I imagine Amazon's brick and mortar competitors are somewhat less amused.
I order a LOT more through Amazon because of Prime than I would otherwise. Knowing my buy-to-hold timeframe is only a couple of days and Amazon's price will be significantly better than other places means Amazon usually gets my first look on almost everything.
I have no idea if I am a profitable customer or not, though. My guess is that the profitable customers with Prime purchase very little or a lot. I don't think I fall in either of those categories (though I might before Christmas is over :).
Funny - Apple recently announced a major free initiative - iCloud and other new free initiatives are popping up in other industries - look at what Stanford and MIT are doing in making some parts of education free.
The one thing that connects all the examples offered (except possibly Amazon) is that the firms listed are old, entrenched players in industries facing real challenges to their basic business models. The companies listed are digging in their heels (and hooks), billing customers rather than driving real innovation.
The article really jumps around industries and it largely ignores why free can be better than paid for certain segments of a market, or what type of economics drive a free model.
I don't think any airlines were seriously considering offering free flights based on ad revenues, nor are there any plans to offer a paid version of the Linux kernel source.
Free makes a lot of sense when the product you are delivering is eyeballs, the world is transitioning towards an abundance of natural resources, and towards a scarcity of attention. There are certainly exceptions to the trend but the macro trends are very clear, this is why even with insane oil prices Apple is a more valuable company than Exxon. Exxon provides resources, Apple provides a conduit for attention.
Even taking peak oil into account, there is only a certain price to which oil can go and after which we make a huge investment in another energy source. As we switched from whale oil to crude oil, we destroyed our whaling fleets and started building oil derricks.
Movie-rental company Netflix enraged many of its customers with its recent plan to split its mail-delivery and video-streaming services into two separate plans, with higher overall charges for those who want both.
Netflix has been planning on doing this for years. It has nothing to do with the economy.
[+] [-] schleyfox|14 years ago|reply
[+] [-] SoftwareMaven|14 years ago|reply
I have no idea if I am a profitable customer or not, though. My guess is that the profitable customers with Prime purchase very little or a lot. I don't think I fall in either of those categories (though I might before Christmas is over :).
[+] [-] incongruity|14 years ago|reply
The one thing that connects all the examples offered (except possibly Amazon) is that the firms listed are old, entrenched players in industries facing real challenges to their basic business models. The companies listed are digging in their heels (and hooks), billing customers rather than driving real innovation.
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] fleitz|14 years ago|reply
I don't think any airlines were seriously considering offering free flights based on ad revenues, nor are there any plans to offer a paid version of the Linux kernel source.
Free makes a lot of sense when the product you are delivering is eyeballs, the world is transitioning towards an abundance of natural resources, and towards a scarcity of attention. There are certainly exceptions to the trend but the macro trends are very clear, this is why even with insane oil prices Apple is a more valuable company than Exxon. Exxon provides resources, Apple provides a conduit for attention.
Even taking peak oil into account, there is only a certain price to which oil can go and after which we make a huge investment in another energy source. As we switched from whale oil to crude oil, we destroyed our whaling fleets and started building oil derricks.
[+] [-] suivix|14 years ago|reply
Netflix has been planning on doing this for years. It has nothing to do with the economy.